CAPP SCOTIABANK INVESTMENT SYMPOSIUM

Transcription

1 CAPP SCOTIABANK INVESTMENT SYMPOSIUM TORONTO APRIL 12-13, 2016 Paul Myers - President & Chief Executive Officer Rob Froese - Chief Financial Officer

2 Forward looking information Certain statements included in this presentation constitute forward looking statements or forward looking information under securities legislation. Such forward looking statements or information are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions. Forward looking statements or information typically contain words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward looking statements or information concerning Canbriam in this presentation may include, but are not limited to, statements or information with respect to: future production levels and the expected timing for the achievement thereof; business strategy and objectives; expected resource potential and future reserves; development and exploration plans and the timing and results thereof; the development of and access to pipelines; the potential future development of LNG export facilities and Canbriam's ability to supply such projects. Forward looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Canbriam believes that the expectations reflected in such forward looking statements or information are reasonable; however, undue reliance should not be placed on forward looking statements because Canbriam can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this presentation, assumptions have been made regarding, among other things: the impact of increasing competition; the timely receipt of any required regulatory approvals; the ability of Canbriam to obtain qualified staff, equipment and services in a timely and cost efficient manner; the ability of Canbriam to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand reserves through acquisition, development or exploration; the timing and costs of operating Canbriam s business; the ability of Canbriam to secure adequate product transportation, including access to pipelines and potential LNG export facilities; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters; and the ability of Canbriam to successfully market its oil and natural gas products. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used. Forward looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Canbriam and described in the forward looking statements or information. These risks and uncertainties may cause actual results to differ materially from the forward looking statements or information. The material risk factors affecting Canbriam include, without limitation, the accuracy of reserves and resources estimates; reliance on key personnel; general economic conditions; volatility in global market prices for oil and natural gas; competition; liabilities and risks, including environmental liability and risks, inherent in oil and gas operations; the availability of capital; alternatives to and changing demand for petroleum products; changes in legislation and the regulatory environment, including uncertainties with respect to environmental legislation; title defects which may adversely affect Canbriam; the availability of drilling and related equipment in the particular areas where such activities will be conducted; constraints related to product transportation; relationships with First Nations in areas in which Canbriam operates; Canbriam's dependence on third parties; and other known or unknown factors. The forward looking statements or information contained in this presentation are made as of the date hereof and Canbriam undertakes no obligation to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise unless required by applicable securities laws. The forward looking statements or information contained in this presentation are expressly qualified by this cautionary statement. 2

3 Investing in Canbriam Energy A fully integrated, BC Montney natural gas growth company with differentiated resource quality Prolific BC Montney asset Experienced management with strong sponsorship Large, low risk, high return drilling inventory Low cost structure supports profitable growth Integrated development strategy 3

4 Canbriam Energy A fully integrated, BC Montney natural gas growth company with differentiated resource quality Private company focused in the Altares region of the prolific Montney formation in northeast BC Montney trend Fort St. John Current production ~27,000 boe/d North Altares Q production 22,920 boe/d (15% liquids) 100% owned & operated infrastructure; production capacity currently 40,000 boe/d 2016 capital program between $100 - $110 million b-24-h Refrig Facility 50 mmcf/d Altares Processing Facility (b-72-a Refrig Facility 160 mmcf/d phases 1 & 2) Vancouver Edmonton Calgary Deep inventory of ~960 net over-pressured, liquids-rich locations with stable, low-decline production base Spectra T North 361 MMboe gross 2P reserves (pre-tax PV10 of $2.3 billion) (1) 65-70% working interest 100% working interest Non-Montney lands Backed by top-tier sponsors Warburg Pincus, ARC Financial, OTPP, GE Asset Management & BlackRock 2 miles Dehy & compression Facility 10 mmcf/d South Altares Natural gas processing plant Spectra T North (1) Based on McDaniel & Associates Consultants Ltd. ( McDaniel & Associates ) reserves report as of December 31,

5 The BC Montney has significant offset well density & peer activity Canbriam s Altares is located in the northern extension of the prolific BC Montney Montney Wells 30 km Canbriam Energy Montney trend Petronas/Progress -Town Shell Fort St. John Progress/Petronas ARC Resources Edmonton Encana Vancouver Calgary CNRL Murphy Suncor Painted Pony Black Swan Unconventional Gas Resources Canbriam - Altares ARC - Dawson Crew Pengrowth Brokers Shell - Groundbirch BC deep drilling royalty credit boundary Spectra T North Pipeline ECA - Swan 5

6 Differentiated resource quality in the BC Montney Four key attributes that differentiate the Altares Montney 1. Over pressured reservoir Up to 2 times over pressured within Main Fault Block 2. Subsurface compartmentalization Leads to distinct high pressure regions with consistent well results 3. Significant thickness Four commercial intervals Average thickness is ~1,100 feet ~500 feet of high quality Upper Montney 4. Strong liquids component 2016E liquids yield: ~30 barrels per MMcf 6

7 Drilling inventory supports low-risk production growth Represents ~37 years of well inventory at current pace of development Reserve bookings: 7 years of inventory at ~3 rig pace Liquids rich development locations: ~30 years of inventory at ~3 rig pace +20 years of upside drilling inventory Proved developed Proved undeveloped Probable Additional Upper Montney locations Additional Lower Montney locations Total derisked development locations Source: Company data and McDaniel & Associates reserve report as of 12/31/15. (1) Represent additional locations primarily located in South Altares, which require a higher natural gas price (NYMEX $ $5.00/MMbtu) to be economic with today s technology. We currently have no near term plans to drill in South Altares. Additional locations (1) Total locations 7

8 MBoe/d Stable production history with strong liquids content Canbriam s production growth reflects addition of phases 1 & 2 of the Altares Processing Facility in Natural gas (inlet separator) Total liquids Nameplate capacity (Boe/d) Production history (MBoe/d) Oct 2015: Phase 2 of Altares Processing Facility (80 MMcf/d) Feb 2015: Phase 1 of Altares Processing Facility (80 MMcf/d ) May 2012: Commissioned 50 MMcf/d b-24-h facility 5 Natural gas 0 Liquids 8

9 Gas Rate (MMcf/d) Shut-in casing pressure (kpa) Optimizing well performance through choke management strategy Canbriam s use of downhole chokes optimizes its over-pressured reservoir Advantages of downhole chokes: Minimizes 1 st year declines and fosters stable production Enhances EUR by maintaining bottomhole pressure Prevents the formation of hydrates when starting up wells Protects surface pipe integrity through better sand management Higher separation between casing pressure (15 MPa) and line pressure (~3.0 MPa) demonstrates strength of the well Jan 2014: upsized choke incremental 1.47 MMcf/d Altares c-b27-h well - Upper Montney May 2014: upsized choke incremental 2.38 MMcf/d Sept 2014: Post-turnaround flush production 30,000 28,000 26,000 24,000 22,000 20,000 18,000 16,000 14,000 12,000 10,000 8, , , , Cumulative-to-date: Dec 31, 2015 = 3.92 bcf 9

10 Rate after 12 Months (mcf/d) 12-month rate vs. cumulative production Canbriam s Altares wells among highest deliverability in Northern BC Montney extension 10,000 9,000 8,000 7,000 6, month cumulative production vs. rate (as of December 2015) Northern Montney wells Canbriam (Altares Development Wells) Northern BC Montney extension 585 wells included in analysis with at least 12 months of production Wells sorted based on rate in 12 th month of production rate (as a direct correlation to EUR) Canbriam Altares development wells (Main Fault Block) highlight benefits over-pressured nature of reservoir & use of downhole chokes 5,000 4,000 3,000 Canbriam type curve (Upper Montney) Canbriam type curve (Lower Montney) Northern BC Montney extension 2,000 1, ,000 1,500 2,000 2,500 3, Month Cumulative Production (mmcf) Source: Frac Dataset as of December

11 boe/d Improving decline rates through choke management Maintenance capital requirement is $50-$60 million annually for 25,000 boe/d of production 20,000 24% corporate decline rate Production by well vintage 2015H , Exploratory 10,000 5,000 0 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 On production date 11

12 MMcf/d Infrastructure strategy supports large scale development Canbriam owns & operates all processing infrastructure 100% owned & operated infrastructure: North Altares facilities Altares Processing Facility consists of: b-72-a gas processing & c-62-a water treatment & recycling hub Natural gas processing facilities: b-24-h: 50 MMcf/d shallow cut refrigeration facility online b-72-a: 160 MMcf/d online; scalable to 400 MMcf/d nameplate South Altares: 10 MMcf/d dehy & compression facility online Natural gas processing expansion Potential future expansion of b-72-a to 400 MMcf/d Phase 3: 120 MMcf/d long lead items ordered b-72-a phase 2: 80 MMcf/d online Q b-72-a phase 1: 80 MMcf/d online Feb b-24-h: 50 MMcf/d current capacity

13 Altares Processing Facility: scalable to 400 MMcf/d Canbriam owns & operates all processing infrastructure Water treatment & recycling hub Commissioned March 2015 Phase 4: 120 MMcf/d Sanctioning to be determined Phase 3: 120 MMcf/d Long-lead items ordered in 2015 Phase 2: 80 MMcf/d Commissioned September 2015 Phase 1: 80 MMcf/d Commissioned February 2015 June

14 Marketing plan supports long term development Canbriam benefits from competitive royalties, supportive stakeholders and easily accessible infrastructure MMcf/d 300 Sufficient takeaway capacity: Spectra T North: 209 MMcf/d firm capacity in early 2016 Actively mitigating unused firm capacity Variable term, scalable with production growth Future transportation options: Spectra T North additional firm capacity TCPL North Montney Mainline project Liquids transportation currently by truck Liquids pipeline take away solution in place for late 2017 Canbriam s firm transportation capacity Canbriam water pipeline Spectra T North Gas transmission Canbriam roads NGLs Liquids transportation Mile post 73 NGL terminal Fort St. John Taylor condensate terminal Future potential firm capacity Williston Lake Current contracted firm capacity Station 2 Spectra 0 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 14

15 $/boe Improving cost structure to sustain profitability Canbriam s low cost structure & robust hedge positions drive solid margins despite low commodity prices $50 Canbriam cost structure vs. price realizations ( ) $45 $44.58 $41.76 $40 $39.24 $36.48 $36.45 $35 $32.89 $31.25 $30 $26.65 $25 $22.82 $23.80 $22.28 $20 $15 $10 $5 $0 $18.75 $18.34 $17.36 $0.75 $15.79 $3.53 $4.89 $1.88 $0.63 $0.89 $6.25 $11.74 $2.76 $4.28 $4.25 $4.72 $5.00 $7.73 $3.45 $5.40 $2.04 $2.02 $1.93 $2.27 $2.08 $2.20 $9.88 $3.23 $3.48 $4.17 $2.53 $1.44 $2.06 $4.29 $2.17 $3.62 $3.74 $2.82 $2.73 $2.31 $2.15 $1.08 $0.95 $0.71 $0.45 Q Q Q Q Q Q Q Q Royalties Operating Transportation G&A Interest Revenue Realized price (inc. hedging) 15

16 Four key elements to Canbriam s financial strategy Disciplined approach to financial management Priority is continuing with infrastructure expansion Flexibility to reduce capital program in 2016 as we ramp into 40,000 boe/d of capacity 2016 capital spending funded through cash flow and undrawn bank lines On October 30, 2015 bank lines increased to $250 million Ensuring capital spending flexibility Maintaining ample liquidity Continue to conservatively manage leverage in the context of private company Key focus on prefunding of capital spending plans in excess of cash flow Appropriately managing leverage if transition made to public company Managing balance sheet Hedging commodity price risk ~70% of 2016 liquids price exposure is hedged with WTI C$97.35 per barrel ~70% of 2016 natural gas production is hedged at $2.19 per gigajoule at Station 2 16

17 Hedge positions & composition of total liquids production Actively hedging commodity price risk through disciplined risk management 120 Natural gas hedges (at March 14, 2016) 3,000 Liquids hedges (at March 14, 2016) $ $2.19 $2.68 2,500 2,000 $97.35 $79.40 $ , $2.47 1,000 $ Station 2 weighted average price (C$/Gj) 0 $ Volume hedged (bbls/d) WTI weighted average price (C$/bbl) Production Production (%) Revenue (%) Q Pricing (% Edm Par) Production Production (%) Revenue (%) Pricing (% Edm Par) Production Production (%) Revenue (%) Pricing (% Edm Par) Natural gas (MMcf/d) % 58% % 64% % 63% - Condensate (bbl/d) 1,722 8% 30% 87% 1,341 7% 26% 93% 814 8% 23% 103% Natural gas liquids (1) (bbl/d) 1,682 7% 12% 38% 1,543 9% 10% 31% 1,004 10% 14% 52% Total (boe/d) 22, % 100% 17, % 100% 9, % 100% (1) Natural gas liquids include Pentanes plus production. 17

18 Investing in Canbriam Energy A fully integrated, natural gas growth company with differentiated resource quality Prolific Montney resource Prolific EUR/well with ~1,100 of Montney vertical thickness on ~62,000 (50% liquids rich) net acres MMboe of gross 1P Reserves (pre-tax PV10 of $1,319 million) (1) MMboe of gross 2P Reserves (pre-tax PV10 of $2,322 million) (1) 100% working interest and operatorship in core lands Large, low risk, high return drilling inventory 962 net locations in the Altares development area representing ~37 years of drilling inventory at a 3-rig pace Over pressured reservoir (up to 2x) and use of down-hole chokes limits declines and facilitates rapid growth High EURs in the primary Altares development area, with liquid yields between bbls/mmcf Expected IRRs in the main fault block range from ~60% (Upper Montney, 2/3rd of inventory) to ~20% (Lower Montney) (2) Integrated development strategy Canbriam s success tied to early quality differentiation within Altares region Processing facilities are 100% owned & operated; scalable infrastructure supports efficient development Team approach fosters culture of collaboration, safety & high performance Prudent approach to financial management supports solid financial position Low cost structure supports profitable growth Profitable in current Station 2 pricing environment of ~$1.75 per Gj 100%-owned gathering and processing facilities support controlled development pace Long term access to water: 20 year permit to withdraw 10,000 m 3 per day from Williston Lake Favorable regulatory regime, scalable firm marketing arrangements & close proximity to gas sales pipeline Experienced management with strong sponsorship Management team averages 25+ years of industry experience with prominent E&P companies Team was built specifically to be able to find and develop differentiated areas within unconventional fairways Experienced E&P sponsors including Warburg Pincus, ARC, OTPP, GE and BlackRock (1) Based on McDaniel & Associates reserves report as of December 31, (2) Pricing assumptions: US$2.50/MMbtu NYMEX; US$45.00/bbl WTI; 0.73 US$/C$ exchange rate. 18

19 Canbriam Energy Inc. 3500, 450 1st Street SW Calgary, AB Canada T2P 5H1 Tel: Paul Myers President & Chief Executive Officer Rob Froese Chief Financial Officer Bill Stait Director, Investor Relations Copyright 2015 Canbriam Energy Inc. All rights reserved.