CORPORATE PRESENTATION MARCH 2013

Transcription

1 CORPORATE PRESENTATION MARCH 213

2 Corporate Snapshot Market Capitalization: Current market capitalization: $.75 billion (TSX: PXX $2.5 2/28/13) Shares outstanding: Basic: 296 million Fully Diluted: 313 million Reserves & Resources 1 : Management ownership 1% (11% fully diluted) Volume (mmboe) NPV 1 (BT) ($mm) 2P Reserves 213 $1,158 Best Estimate Contingent Resources (2C) 583 $2,42 Production: Current production ~9, boe/d (99.5% oil weighted) Potential production 1,+ boe/d using existing technologies Financial: 212 cash flow of $83 mm $8 million working capital deficiency (as at 12/31/12) No debt, undrawn $115 million bank facility (as at 12/31/12) Self funded for the next months Core Assets: Onion Lake: Current heavy oil production and a potential 12, bbl/d SAGD project Mooney: Current heavy oil production ramping-up with ASP flood, potential expansion Blackrod: 8, bbl/d Grand Rapids SAGD project with pilot operating for over a year 1. Source: Sproule Unconventional Limited ( Sproule ) reserve and contingent resource evaluation (best estimate) reports effective December 31, 212 (see Cautionary Statement on Contingent Resources at the back of the presentation) 2

3 Asset Highlights MOONEY BLACKROD ONION LAKE 7, 6, 5, 4, 3, 2, 1, Reserves and Contingent Resource (MMbbls) The three core areas have common characteristics BlackPearl operated High working interests Resource exploitable with proven technology Significant amount of 2P reserves and contingent resource Development plans supported by successful analogues and pilots Onion Lake Mooney Blackrod 2P Reserves 2C Resource Reserves and Resource Summary 1. Working Q4 212 Potential 2P Reserves 2C Resources Interest Production Production NPV 1 (BT) 2 Technology (%) (mmbbl) (mmbbl) (bbl/d) (bbl/d) ($mm) Onion Lake % ,857 15, $1,35 Conventional Wells, SAGD Mooney 1% ,329 8, $378 Horizontal Wells, ASP Flood Blackrod 1% , $2,11 SAGD Other 1% , $46 Conventional Wells Total ,67 15, $ Source: Sproule Unconventional Limited ( Sproule ) reserve and contingent resource evaluation (best estimate) reports effective December 31, 212 (see Cautionary Statement on Contingent Resources at the back of the presentation) 3

4 Onion Lake Conventional Development Key Onion Lake Conventional Metrics Onion Lake Area Map Oil Qualty Stage of Regulatory Approval Current Production Potential Production 2P Reserves 1. 2C Resources 1. [ API] [bbl/d] [bbl/d] [mmbbl] [mmbbl] 11 Approved 4, 4, Current conventional heavy oil production is from the Cummings Formation Accounted for 63% of total Company production in 212 Certain areas in the field are maturing (over 3 wells drilled) but we anticipate we can keep current conventional production flat for the next 3 to 4 years 146 future drilling locations assigned by Sproule in the 2P and 2C cases Potential to increase locations with future delineation drilling Typical well IP 4 6 bbl/d Estimated capex of $.6 million per well Plan to continue development over the next 3 to 5 years 2 wells planned in Source: Sproule Unconventional Limited ( Sproule ) reserve and contingent resource evaluation (best estimate) reports effective December 31, 212 (see Cautionary Statement on Contingent Resources at the back of the presentation) 4

5 Onion Lake SAGD Development Key Onion Lake SAGD Metrics Oil Qualty Stage of Regulatory Approval Current Production Potential Production 1. 2P Reserves 2. 2C Resources 2. [ API ] [bbl/d] [bbl/d] [mmbbl] [mmbbl] 11 Filed 1,5 67 Onion Lake Regional Analogue Map Net pay in the Cummings Formation on a portion of the Onion Lake lands is 1 m 24 m, making it suitable for thermal development Other similar thermal projects in Saskatchewan include CNRL s Tangleflags, Husky s Pikes Peak and Husky Lashburn Submitted a 12, bbl/d (gross) SAGD development application; approval expected in Q2 213 The Company estimates approval should result in the reclassification of 3 5 mmbbl of Best Estimate Contingent Resources into Probable Reserves Recovery rates in excess of 5% anticipated, with a CSOR of year project life Steam Injector 1. Cumulative peak ultimate conventional and SAGD production at Onion Lake expected to be 12, - 15, bbl/d (less than combined individual segments due to timing differences) net to BlackPearl s working interest 2. Source: Sproule Unconventional Limited ( Sproule ) reserve and resource evaluation (best estimate) reports effective December 31, 212 (see Cautionary Statement on Contingent Resources at the back of the presentation) 3. Source: Sproule / Management 5

6 Mooney ASP 1. Flood Key Mooney Metrics Oil Qualty Stage of Regulatory Approval Current Production Potential Production 2P Reserves 2. 2C Resources 2. [ API ] [bbl/d] [bbl/d] [mmbbl] [mmbbl] 16 Approved 3. ~4, 8, Mooney Field Calendar Day Production (bopd) Reservoir is the Bluesky Formation Key to unlocking upside value has been the implementation of an ASP flood Phase 1 initiated in Q3 211 Current production >2, bbls/d Peak production of 3,+ bbls/d anticipated in 213 from Phase 1 Oil Recovery Factors expectation increase from 4-5% to 3-35% Pilot recovered approximately 18% before being shut down to initiate commercial development Favourable royalty treatment for EOR approved projects <1% royalty during the initial years 4+ year project life 1. Alkali Surfactant Polymer 2. Source: Sproule Unconventional Limited ( Sproule ) reserve and resource evaluation (best estimate) reports effective December 31, 212 (see Cautionary Statement on Contingent Resources at the back of the presentation) 6 3. ERCB approval was received for Phase 1 of commercial ASP flood development; Phase 2 application filed

7 Mooney Expansion of ASP Flood Mooney Detailed Area Map Expansion Plans Drilled 16 horizontal wells on Phase 2 lands Current production of 1,9 bbls/d Expand ASP Flood to Phase 2 lands in months Regulatory Application filed Infill wells to be drilled in 2H 213 Minor infrastructure changes required (road and pipeline extension) Phase 3 lands to be tested in 213 7

8 $/bbl $/bbl Mbbls Mooney Primary Development vs ASP Flood 4 Reserves/well Operating Costs Primary ASP ASP increases total oil recoveries ASP has higher op costs (chemicals, etc.) but lower capital costs per barrel Overall equivalent or improved recycle ratio with ASP flood. 1 Primary ASP Capital Costs 2 1 Primary ASP 8

9 Blackrod SAGD Oil Sands Project Key Blackrod Metrics Stage of Oil Reg. Current Potential 2P 2C Qualty Approval Prod. Prod. Reserves 1. Resources 1. [ API ] [bbl/d] [bbl/d] [mmbbl] [mmbbl] 9 Filed ~3 8, Located in the Athabasca Oil Sands region Lower Grand Rapids Formation at a depth of approximately 3 metres 1 28 metres of continuous net pay Homogenous shoreface reservoir is predictable 1% owned and operated 2 3+ year project life Undertook a pilot to de-risk the project and better understand the operating characteristics 1. Source: Sproule Unconventional Limited ( Sproule ) reserve and resource evaluation (best estimate) reports effective December 31, 212 (see Cautionary Statement on Contingent Resources at the back of the presentation) 9

10 Production Rate Blackrod SAGD Pilot Progress Blackrod Lower Grand Rapids Pilot SAGD Pair Installed downhole pump Reached commercial production rates Off production for regular maintenance and facility inspection Experimented with new pump and different steam strategies Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Oil Prod (bopd) Cum SOR (bw/bo) Inst SOR (bw/bo) Steam Oil Ratio Achieved commercial level production rates over 4 bbl/d after 1 months of steam instantaneous SOR under 3 Well has produced over 1, barrels of oil to date Pilot well pair is only 7 m long, the commercial project wells are expected to be 9 1,2 m in length, which will positively impact production rates Currently experimenting with the well to find best operating parameters Performance has confirmed project s commerciality Pilot to be expanded with an additional well pair and minor expansion of steam and water handling facilities The second well pair will be longer (95 m) and placed deeper in the reservoir to confirm the expected reservoir performance Well pair drilled in Q1 213; steam injection expected to begin in Q

11 Blackrod Commercial Development 8, bbl/d commercial development application filed in Q2 212 Application approval expected in late 213 or early 214 Project to be built in phases, with the first phase planned for 2, bbl/d; two additional phases of 3, bbl/d each to follow 182 million bbls 1 of probable reserves assigned to the first phase of the project 476 million bbls 1 of best estimate contingent resources assigned to phase 2 and 3 Project team has been assembled and detailed engineering has commenced Phase 1 capital cost estimate of $35, $4, / bbl/d Shown on the right is an illustration of the layout of phases of Blackrod development Phases of Blackrod Area Map Activity Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Environmental Data Gathering Facilities Engineering Regulatory Review Facilities Construction Operations Start 1. Source: Sproule Unconventional Limited ( Sproule ) reserve and resource evaluation (best estimate) reports effective December 31, 212 (see Cautionary Statement on Contingent Resources at the back of the presentation) 11

12 Blackrod vs. Other Reservoirs (Scale & Predictability) The Blackrod Grand Rapids development is within a relatively homogeneous and predictable shoreface sand reservoir in contrast to those in the more common, but much less homogeneous and predictable, McMurray estuarine / fluvial channel systems Lower productivity in the Grand Rapids is more than compensated by scale and homogeneity Project scale / predictability has led to the CNRL Primrose project being very profitable even though its reservoir is inferior to best in class McMurray channel sands such as Cenovus Foster Creek Foster Creek is unique in Western Canada and the number of similar large and continuous McMurray channel sands projects is very limited Many future projects in the McMurray may have similar results to the Connacher Great Divide project due to heterogeneous sands The successful results from the first pilot well pair and the CNRL Wolf Lake analogue project can be easily projected to over 5 more well pairs at Blackrod Connacher: Great Divide BlackPearl: Blackrod Cenovus: Foster Creek CNRL: Primrose 12

13 213 Guidance Estimates Production (boe/d) Annual average 9, 1, Exit 1, 1,5 Cash flow from operations ($millions) 5 6 Capital expenditures ($millions) Year-end debt ($millions) 8 9 Year-end working capital ($millions) 5 Onion Lake 4% 213 Avg. Production Forecast (boe/d) Other 1% John Lake 7% Blackrod 4% 213 Capital Program ($mm) Blackrod $ Second well pair - Detailed engineering - Ordering long lead time equipment Mooney $ Drill 2 25 wells on phase 2 & 3 expansion Onion Lake $ Drill 2 primary development wells - Minor infrastructure upgrades Non-Core Assets $ Drill 6 1 horizontal wells - Infrastructure upgrades $ Mooney 49% 1. Pricing assumptions used for 213 include WTI oil price of $95/bbl, light/heavy differential of $27/bbl and CAD/US exchange rate of $1. 13

14 Funding For Our Thermal Projects Actively evaluating financing alternatives to fund our projects Balance between minimizing NAV dilution versus taking on excess financial risk JV Blackrod and possibly Onion Lake to develop the projects Selling One of the Core Assets to Fund Blackrod Develop Onion Lake SAGD First and Defer Blackrod Development Debt/Equity finance Phase 1 Development at Blackrod Minimal or no debt Giving up some of the future upside potential May lose some operational control Impact on saleability of the Company $2 $3 mm in additional financing required, but deferred 2 years Likely to use debt rather than equity Loss of short-term cash flow $25 $3 mm in debt financing required No equity dilution Increased production makes it easier to fund Phase 1 of Blackrod in the future $5 - $6 mm in debt/equity required Equity component would be highly dilutive at current share prices Retain upside from all of our projects Largest project is delayed 14

15 Jan-9 Mar-9 May-9 Jul-9 Sep-9 Nov-9 Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Oil Pricing High volatility in oil prices particularly in North America In 212, our realized oil price ranged from $43/bbl to $77/bbl A $1/bbl change in our wellhead price impacts annual cash flow by $26 mm % of our production is moving by rail WTI (C$/bbl) Brent (C$/bbl) WCS (C$/bbl) PXX Wellhead Price (C$/Bbl) Currently unhedged 1. WCS Western Canadian Select 2. Based on 212 average production and royalty rates 15

16 $ mm $ mm Share Price vs. Asset Value 2 Perspectives 4, 4, 3,5 3,5 3, 3, 2,5 2,5 Blackrod 2, 1,5 2C 2, 1,5 1, 5 Market Cap Feb. 28, 213 ($2.5/sh) 2P 2P + 2C Value 1%, BT) 1, 5 Market Cap Feb. 28, 213 ($2.5/share) Onion Lake Mooney 2P + 2C Value 1%, BT) BlackPearl is trading at 64% of its 2P Reserve Value No contingent value recognized for our three core properties 2P + 2C NAV of $12/share Current share price attributes no value to Blackrod and only 4% of the value of Onion Lake 1. Proved plus probable (2P) reserves from the Sproule report effective December 31, Best Estimate contingent resource from the Sproule contingent resource reports for the Blackrod, Onion Lake and Mooney areas effective December 31, 212 (see cautionary statement on contingent resources at the back of the presentation). 16

17 Key Milestones Next Months Regulatory approval for Onion Lake 12, bbl/day SAGD project Regulatory approval for first 2, bbl/day phase at Blackrod Development financing in place for one or both thermal projects Expansion of the ASP flood at Mooney , 8, 6, 4, 2, 2P Reserves (mmbbl) Production (bbl/d) Source: Sproule Unconventional Limited ( Sproule ) reserve evaluation reports dated December 31, 211 (reports updated to May 31, 212 for the Blackrod project). 17

18 Cautionary Statements FORWARD-LOOKING STATEMENTS: This presentation contains certain forward-looking statements and forward-looking information (collectively referred to as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements typically contain words such as "anticipate", "believe", "plan", "continuous", "estimate", "expect", "may", "will", "project", predict, targeting, seek, intend, could, potential, scheduled, "should", outlook or similar words suggesting future outcomes. In particular, this presentation contains forward-looking statements pertaining to our business plans and strategies; anticipated and potential oil and gas production levels for each of our core areas and corporate totals; ability to self-fund our capital spending plans for the next 12 to 15 months; timing for regulatory approval for the Onion Lake SAGD project and the potential to reclassify contingent resources to probable reserves at Onion Lake; expected oil recovery rates for the Onion Lake SAGD project; oil recovery rates and anticipated peak production rates from the Mooney ASP flood; expected timing for regulatory approval for the first phase of the Blackrod SAGD project; corporate guidance for 213; methods, sources and timing to of additional financing our capital expenditure programs. In addition, statements relating to "reserves" or resources are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described exist in the quantities predicted or estimated and can be profitably produced in the future. The forward-looking statements in this presentation reflect certain assumptions and expectations by management. The key assumptions that have been made in connection with these forward-looking statements include the continuation of current or, where applicable, assumed industry conditions, the continuation of existing tax, royalty and regulatory regimes, commodity price and cost assumptions, the continued availability of cash flow or financing on acceptable terms to fund the Company s capital programs, the accuracy of the estimate of the Company s reserves and resource volumes and that BlackPearl will conduct its operations in a manner consistent with past operations. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. By their very nature, forward-looking statements involve inherent risks and uncertainties which could cause actual results to differ materially from those contained in forward-looking statements. These factors include, but are not limited to, risks associated with fluctuations in market prices for crude oil, natural gas and diluent; risks related to the exploration, development and production of crude oil, natural gas and NGLs reserves; general economic, market and business conditions; substantial capital requirements; uncertainties inherent in estimating quantities of reserves and resources; extent of, and cost of compliance with, government laws and regulations and the effect of changes in such laws and regulations from time to time; the need to obtain regulatory approvals on projects before development commences; environmental risks and hazards and the cost of compliance with environmental regulations; aboriginal claims; inherent risks and hazards with operations such as fire, explosion, blowouts, mechanical or pipe failure, cratering, oil spills, vandalism and other dangerous conditions; potential cost overruns; variations in foreign exchange rates; diluent supply shortages; competition for capital, equipment, new leases, pipeline capacity and skilled personnel; uncertainties inherent in the SAGD bitumen and ASP recovery processes; credit risks associated with counterparties; the failure of the Company or the holder of licenses, leases and permits to meet requirements of such licenses, leases and permits; reliance on third parties for pipelines and other infrastructure; changes in royalty regimes; failure to accurately estimate abandonment and reclamation costs; inaccurate estimates and assumptions by management; effectiveness of internal controls; the potential lack of available drilling equipment and other restrictions; failure to obtain or keep key personnel; title deficiencies with the Company s assets; geo-political risks; risks that the Company does not have adequate insurance coverage; risk of litigation and risks arising from future acquisition activities. Further information regarding these risk factors and others may be found under "Risk Factors" in the Annual Information Form. Undue reliance should not be placed on these forward-looking statements. Readers are cautioned that the actual results achieved will vary from the information provided herein and the variations could be material. Readers are also cautioned that the foregoing list of assumptions, risks and factors is not exhaustive. Consequently, there is no assurance by the Company that actual results achieved will be the same in whole or in part as those set out in the forward-looking statements. Furthermore, the forward-looking statements contained in this Annual Information Form are made as of the date hereof, and the Company does not undertake any obligation, except as required by applicable securities legislation, to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained herein are expressly qualified by this cautionary statement. CONTINGENT RESOURCES: Contingent resources are defined in the COGE Handbook as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. In the case of the contingent resources assigned to BlackPearl s three core projects the contingencies include the requirement for more evaluation drilling to better define the resource, the absence of submission of commercial SAGD development applications (for future phases of development at Blackrod), the likelihood of attaining regulatory approvals for commercial SAGD development (for our Onion Lake SAGD project), further establishment of increased oil production response from the ASP flood at Mooney and the uncertainty of the timing of production and development. There is no certainty that it will be commercially viable to produce any of the contingent resources..these volumes are the arithmetic sums of the Best Estimate Resources for Blackrod, Mooney and Onion Lake. Best estimate (P5) is a classification of estimated resources described in the COGE Handbook as being considered to be the best estimate of the quantity that will be actually recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 5% probability that the quantities actually recovered will equal or exceed the best estimate. Please refer to our Annual Information Form for a more detailed discussion of our contingent resources. BOE s: All references to BOEs are based on a 6 to 1 conversion ratio. BOEs may be misleading, particularly if used in isolation. A BOE conversion of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. NON-GAAP MEASURES: This presentation uses the terms Cash flow from operations and cash flow which represent cash flow from operating activities before asset abandonment costs and working capital adjustments. 18