TD Securities Calgary Energy Conference. Grizzly Oil Sands

Transcription

1 TD Securities Calgary Energy Conference July 2013

2 Forward-Looking Statements Certain statements, estimates and financial information contained in this presentation ("Estimates") constitute forwardlooking statements or information. Such forward-looking statements or information involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from the Estimates or results implied or expressed in such forward-looking statements. While presented with numerical specificity, the Estimates are based (i) on certain assumptions that are inherently subject to significant business, economic, regulatory, environmental, seasonal, and competitive uncertainties, contingencies and risks including, without limitation, assumptions of resource, ability to obtain debt and equity financing, capital costs, construction costs, well production performances, operating costs, commodity pricing, differentials, royalty structures, regulatory approvals, and other known and unknown risks, all of which are difficult to predict and many of which are beyond the control of ULC ("Grizzly"); and (ii) upon assumptions with respect to future business decisions that are subject to change. There can be no assurance that the Estimates or the underlying assumptions will be realized and that actual results of operations or future events will not be materially different from the Estimates. Under no circumstances should the inclusion of the Estimates be regarded as a representation, undertaking, warranty or prediction by Grizzly, or any other person with respect to the accuracy thereof or the accuracy of the underlying assumptions, or that Grizzly will achieve or is likely to achieve any particular results. The Estimates are made as of the date of this presentation and Grizzly disclaims any intent or obligation to update publicly or to revise any of the Estimates, whether as a result of new information, future events or otherwise. Recipients are cautioned that forward-looking statements or information are not guarantees of future performance and, accordingly, recipients are expressly cautioned not to put undue reliance on forward-looking statements or information due to the inherent uncertainty therein. There are significant differences in the criteria associated with the classification of reserves, prospective resources and contingent resources. Contingent resources and prospective resources estimates involve additional risks, specifically the risk of not achieving commerciality and exploration risk, respectively, not applicable to reserves estimates. No adjustments for these risks have been made in the groupings of reserves and recoverable resources. All reference to dollars in this presentation should be assumed to refer to Canadian dollars, unless otherwise noted. All references to reserves and or resources represent Grizzly s interest in reserves and resources prior to the deduction of Crown royalties, unless otherwise noted. 2

3 Investment Highlights One of the Largest Oil Sands Land Positions in Alberta > 800,000 net acres in the Athabasca and Peace River oil sands regions (100% operated, nearly 100% WI) focused on SAGD development ~ 3.2 billion bbls of Contingent Resources (1) across more than 30 project areas Significant exploration and exploitation technology upside potential Well Defined Growth Plan with Near-Term Production Plans to bring on 150,000 bbls/d of bitumen production over the next decade Algar Lake Phase 1 is in the final stages of construction with first production expected by end of Regulatory approvals are in place for Phase 2 Plans to file a 12,000 bbls/d Phase 1 development application by the end of 2013 at May River (819 mmbbls of Contingent Resources) At Thickwood, a 12,000 bbls/d development application was filed in December 2012 Advanced, Relocatable, Modularized, Standardized ( ARMS ) Development Model Grizzly s unique ARMS development model to extract bitumen enables repeatable and scalable project development, reducing execution and financing risk Modular facilities can be easily moved and re-used to reduce costs over time and have a 50% smaller footprint than a typical SAGD facility Substantially fewer field construction hours reduce construction costs and risk 1. Source: GLJ Petroleum Consultants Ltd., as at December 31, 2012; GLJ Petroleum Consultants Ltd. May River Update as at May 31,

4 Investment Highlights (Cont d) Rail Transportation Strategy Grizzly is developing infrastructure to obtain consistent access to premium markets by shipping its production by rail to the U.S. Gulf Coast oil refining market Highly Experienced Management Team with Significant Oil Sands Project Expertise Executive and management experience at leading SAGD projects including: Jackfish (Devon), Surmont (Conoco), Cold Lake (Imperial Oil), Hangingstone (JACOS), MacKay River, Dover UTF and Meadow Creek (Suncor) Financial Strength and Flexibility Grizzly is a private oil sands company founded in 2006, owned by Wexford Capital LP and Gulfport Energy Corporation A $125 million bank revolver provides additional flexibility going forward 4

5 Accomplishments Since Last Conference Algar Lake > 90% of construction is complete for the Algar Lake Phase 1 project Commissioning and turnover is currently under way May River Completed a 29 well delineation drilling program last winter Thickwood Filed a 12,000 bbls/d development application in Q Rail Strategy Financing Initiated rail marketing strategy to ensure consistent access to premium markets Loading site near May River and unloading site to barge on the Lower Mississippi river are under development Arranged $125 million bank borrowing facility, to provide additional funding flexibility going forward 5

6 Development Portfolio Poised for Value Growth In-fill Project Development Increasing Value ($/bbl) Land Acquisition & Resource Delineation Regulatory Approval and Project Engineering and Construction Thickwood Project Execution and Reservoir Validation Algar Lake Phase 1 May River Resource Capture Advancement of Resource Development Project Development Project Start Up Project Execution Repeatability Grizzly Oil Currently Sands in the Early Stages of Sustainable Value Creation 6

7 800,000+ Net Acres of Alberta Oil Sands Leases Lease Other Oil Sands Lease Alberta Oil Sands Areas Producing Thermal Project Under Construction Thermal Project Asphalt Creek Ells North McClelland Lake Firebag River Liege-Harper Sunshine West Ells West Ells Silvertip Ells Central & South Suncor Firebag Husky/BP Sunrise AOC Dover West (Pilot) Dover Suncor MacKay River North Star- Nina Loon Prairie Birchwood Thickwood Hills Southern Pacific McKay PetroChina MacKay Fishery Creek City of Fort McMurray City of Peace River Shell Peace River Baytex Seal Slave Muskwa Saleski West Laricina Germain Laricina Saleski (Pilot) Athabasca Rapids Saleski East Black Bear Riverside Algar Lake Horse River JACOS - Hangingstone JACOS / Nexen Hangingstone Connacher Algar Connacher Pod One Athabasca - Hangingstone Nexen / CNOOC Long Lake COP/Total Surmont House Kodiak Statoil/PTTEP - Leismer Cenovus/COP Narrows Lake BlackPearl Blackrod (Pilot) May River KNOC BlackGold MEG Christina Lake Cenovus/COP Christina Lake Devon - Jackfish Cherpeta CNRL - Kirby Cenovus /COP Foster Creek 7

8 Grizzly Assets Grizzly has a high quality resource based on Steam Assisted Gravity Drainage ( SAGD ) with additional upside using other reservoir recovery processes 3.2 billion barrels of 2P Reserves + Contingent Resources (1) Resources primarily located in low risk clastic reservoirs, with some exposure to the carbonates Two thirds of current lease position remains unexplored, which provides upside potential Bitumen Initially in Place (mmbbls) Proved Reserves (mmbbls) 2P Reserves (mmbbls) Contingent Resources (mmbbls) 2P Reserves + Contingent Resources (mmbbls) 1. Source: GLJ Petroleum Consultants Ltd. as at December 31, 2012; GLJ Petroleum Consultants Ltd. May River Update as at May 31, All Contingent Resources herein refer to Best Estimates. Management s potential plateau production level is 340,000+ bbl/d 2. Due to the timing of project development, peak production is 400,000 bbls/d, rather than the summation of individual peak plateau production numbers Potential (1) Plateau Production (bbls/d) Clastics (Existing Technologies) (1) Under Construction Projects Algar Lake ,000 Near-Term Development Projects May River 1, ,000 Thickwood 2, ,000 Other Projects Additional Growth Properties 14, ,924 1, ,000 Total Existing Technologies 19, ,868 3, ,000 Carbonates (Technology under Development) (1) Additional Growth Properties 6, ,000 TOTAL 26, ,067 3, ,000 (2) 8

9 Rapidly Growing Production Profile Grizzly plans to build and operate 25 ARMS plant cores at five different project areas with up to ~150,000 bbls/d of bitumen production over the next decade Additional properties provide development opportunity over the next 20 years to support 300,000 bbls/d by 2030 according to GLJ 355,000 (1) 81, , ,000+ 5, ,200+ 5,500+ 5, , ,000+ Algar Phase Algar Phase May River 1 & Thickwood 1 & May River Kodiak Silvertip Algar Phase Source: GLJ Petroleum Consultants Ltd., as at December 31, 2012; GLJ Petroleum Consultants Ltd. May River Update as at May 31,

10 Grizzly s ARMS Development Model Grizzly s innovative Advanced, Relocatable, Modular, Standardized (ARMS) Development Model uses proven technologies in a more flexible, compact form Repeatable and manageable project size enables scalable development and reduces execution and financing risk ARMS will allow Grizzly to exploit smaller bitumen pools and exploit larger pools in years vs years in traditional SAGD Reduced cost Shop focused construction vs. field 50% smaller footprint vs. typical SAGD facility Fewer pipe racks less steel Advanced communications Re-use plants to reduce average cost over time Reduced downtime Production trains can operate independently Self-generated power Advanced centralized process controls Reduced risk Portability allows Grizzly to manage production levels over the life of a reservoir GRIZZLY S ARMS PLANT CORE 10

11 ARMS Development Model Requires 50% Smaller Footprint Traditional SAGD Development (~10,000 bbls/d) Central Plant footprint Custom Built for Reservoir Steam Generation Electrical Buildings Glycol Building Glycol Cooler Inlet Building Water Treatment Tank Building Fuel Gas Evaporator Source Water 120 metres 400 metres ARMS Development Model (~10,000 + bbls/d) Central Plant footprint - Standardized Central Processing Facility 1 Central Processing Facility metres Storage Tanks and Pumps 2 Storage Tanks and Pumps metres * Total Central Plant footprint includes outbuildings, ponds, road, laydown areas and top soil stockpiles not shown in the diagrams; based on regulatory filings Traditional SAGD uses some modularization but still requires significant fabrications in the field of larger units and tanks CPF assembly time months vs. With ARMS all modules, equipment and tanks are transported to site and quickly bolted together CPF assembly time days Proven Technologies in a More Flexible, Compact Form 11

12 Algar Lake Construction Pictures Evaporator Tower & Construction Office / Phase 2 Site Tank Farm Central Processing Facility Well Pad 12

13 ARMS Capital Efficiency Leads Industry $30,000 $25,000 $20,000 $15,000 $10,000 $5, SAGD Capital Intensity (Capital Spent per barrel per day of steam capacity) Under Development $ Built Legend 1 Kai Kos Dehseh (Statoil) 2 Algar (Connacher) 3 Jackfish Phase II (Devon) 4 Christina Lake Phase C (Cenovus) 5 McKay (Southern Pacific) 6 Firebag Stage 3-4 (Suncor) 7 Christina Lake Phase D-E (Cenovus) 8 Christina Lake Phase 2B (MEG) 9 Kirby (CNRL) 10 West Ells Phase 1 (Sunshine) 11 Germain Comm. Demo. SC-SAGD (Laricina) 12 Hangingstone Phase 1 (Athabasca) 13 Sunrise Phase 1 (Husky) 14 Foster Creek Phases F-H (Cenovus) 15 Jackfish Phase III (Devon) 16 Cold Lake Phases (Imperial) 17 BlackGold (KNOC) 18 Lindbergh Phase 1 (Pengrowth) 19 Germain Phase 2 (Laricina) 20 Birchwood Phase 1 (Marathon) 21 Hangingstone Phase 1 (JACOS) 22 Algar Lake Phase 1 23 Algar Lake Phase 2 24 May River 1 & 2 25 Thickwood Phases 1 & 2 * Source: TD Securities and Management estimates for Algar Lake Phase 1 and Phase 2, May River & Thickwood 13

14 Algar Lake Property 10-12,000 bbls/d A 100% W.I. in 56,960 contiguous acres of oil sands leases in the southern Athabasca region GLJ has assigned 114 mmbbls of 2P Reserves and 35 mmbbls of Contingent Resources The Algar development area has been extensively explored 65 cored delineation wells and an additional 16 appraisal exploration core holes outside of the initial development area Reservoir characteristics Up to 22 metres thick bitumen pay No bottom water or top gas Continuous caprock over 40 metres thick Identified makeup water source for Phases 1 & 2 Expansion potential: 18+ metre thick bitumen pay outside of the initial development area T88 T87 T86 T85 T84 T83 T82 T81 R14 R13 R12 R11 R10 R8W4 14

15 Algar Lake Reference Well AB W4 Wabiska Wabiskaw-D 5m McMurray Devonian Devonian 15

16 Algar Lake Reservoir Quality Gamma Ray Logs Over Horizontal Production Well Trajectories Excellent Reservoir Quality over Entire Well Length 16

17 May River Property 90, ,000 bbls/d 46,720 acres of of 100% working interest oil leases located in one of the most attractive areas of the Athabasca oil sands T78 GLJ has assigned 819 mmbbls of Contingent Resources T77 Adjacent to industry leading SAGD projects including Statoil/PTTEP KKD project and close to KNOC BlackGold and CNRL Kirby projects T76 Located ~130 km southeast of the city of Fort McMurray and 14 km from the town of Conklin and in close proximity to existing key infrastructure including roads, railway, airports and electrical and natural gas line connections T75 93 stratigraphic wells have been drilled and logged down to the McMurray Formation T74 Grizzly completed a 29 delineation well drilling program last winter T73 Initial 12,000 bbls/d regulatory development application to be filed in Q R10 R9 R8 R7 R6W4 17

18 819 MM Barrels of High Quality Recoverable Bitumen GLJ Best Estimate Net Continuous Bitumen Pay metres Net Continuous Pay Multiple stacked channel system Analogous to nearby Cenovus, Devon, MEG and Statoil projects Up to 40 metres thick bitumen pay with continuous cap rock High permeability sands should deliver bitumen at steam-oil ratios in the 2.2 to 2.8 range 18

19 Rail Transportation Strategy Grizzly is establishing infrastructure to transport bitumen via rail to the U.S.G.C refining market, leading to more flexibility to realize consistently higher bitumen values. Investment includes: Potential Rail Transportation Routes Investing in a rail loadout facility to transport bitumen proximate to the May River lease site and a rail to barge off-load facility on the lower Mississippi River Expected to cost approximately $21-$22 (includes terminal cost) per barrel to transport from the rail loadout to U.S. Gulf Coast Flexibility to transport to North American East and West Coast refining markets Condensate back-haul opportunities from the U.S. Gulf Coast are available to resource diluent requirements at lower cost Evaluating diluent recovery unit opportunities to further reduce diluent blending and enhance transportation economics Potential markets for bitumen transport via rail 19

20 Terminal Site Pictures Windell Terminal Site Conklin, Alberta Paulina Terminal Site - Louisiana 20

21 2013 Business Plan Highlights Algar Lake Complete Algar Lake Phase 1 project Demonstrate Algar Lake reservoir & ARMS plant performance May River Evaluate May River delineation drilling program File a 12,000 bbls/d regulatory development application in Q Thickwood Advance Thickwood regulatory development application Rail Strategy Establish rail transportation infrastructure to ensure consistent access to global crude prices and lower diluent cost supply 21

22 Appendix 1 Large Inventory of Future Development Projects 22

23 Thickwood Hills 10,000-12,000 bbls/d 100% W.I. interest in 38,400 acres 59 cored delineation wells drilled T92 GLJ has assigned 24 mmbbls of 2P Reserves and 90 mmbbls of Contingent Resources Reservoir characteristics (Wabiskaw D): T91 Bitumen sand covers entire land block Clean, blocky sand up to 20 metres thick No bottom water or top gas Technology upside in Wabiskaw A: T90 Thinner, laterally extensive resource with excellent properties and less viscous bitumen 1.1 billion barrels of bitumen initially-in-place (13 mmbbls included in contingent resources) T89 Area competitors plan to pilot CSS and conductive heating 12,000 bbls/d regulatory development application filed in Q T88 R16 R15 R14 R13W4 23

24 Silvertip Ells North 24,000+ bbls/d (net) 24,832 net acres of leases Includes 40% interest in the Ells North, Ells Central & Ells South 40 delineation wells drilled 564 mmbbls of contingent resources Reservoir characteristics Bitumen pay up to 21 metres thick No top gas or lean zones in contact with pay Thin, discontinuous bottom water zones T96 T95 T94 T93 T92 Grizzly 100% Lease Oil Pipeline System Gas Pipeline System Road Delineation Wells Producing Project Under Construction Project Planned Project Mining Region 2010 Prior to 2010 T91 R16 R15 R14 R13 R12 R11W4 24

25 Kodiak 10,000+ bbls/d 100% W.I. in 17,280 contiguous acres 30 cored delineation wells drilled 173 mmbbls of contingent resources T80 Reservoir characteristics Thin, discontinuous bottom water (not widespread) Top gas sands separated from the main reservoir (not in direct communication) Bitumen pay up to 18 metres thick T79 T78 Grizzly 100% Lease Oil Pipeline System Gas Pipeline System Road Delineation Wells Producing Project Under Construction Project Planned Project Mining Region 2010 Prior to 2010 T77 T76 R10 R9 R8 R7 R6W4 25

26 West Ells 100% W.I. in 12,160 acres 240 mmbbls of contingent resources Targets: Wabiskaw D and Wabiskaw A reservoirs Wabiskaw D sands well developed in the north and west blocks and in the overlying Wabiskaw A which is prominent in the south and west portions Wabiskaw D net pay of up to 20 metres mapped Top gas is present in certain areas No bottom water Wabiskaw A in the south up to 15 metres thick Associated top gas and lean bitumen can be present No bottom water Significant area infrastructure under construction T95 T94 T93 Grizzly 100% Lease Oil Pipeline System Gas Pipeline System Road Delineation Wells Producing Project Under Construction Project Planned Project Mining Region 2010 Prior to 2010 R19 R18 R17W4 T92 26

27 Birchwood 100% W.I. in 51,200 acres Located directly south of PetroChina / AOSC s 250,000 bbls/d Dover Project and AOSC s Dover West Project 44 delineation wells drilled 453 mmbbls of contingent resources Two reservoirs targeted Wabiskaw A and the underlying Wabiskaw D Explore to delineate 10,000 bbls/d projects T93 T92 T91 Grizzly 100% Lease Oil Pipeline System Gas Pipeline System Road Delineation Wells Producing Project Under Construction Project Planned Project Mining Region 2010 Prior to 2010 R19 R18 R17 R16 R15W4 T90 Explore to Delineate 10,000 bbls/d Projects 27 27

28 Firebag River 100% W.I. in 45,440 contiguous acres T98 16 delineation wells drilled 63 mmbbls of contingent resources T97 Reservoir characteristics Thick overlying mudstone above contingent barrels Bitumen pay estimated up to 26 metres Some of the richest oil saturations in the Athabasca Region High permeability T96 T95 Technology upside in areas with nontraditional caprock T billion bbls bitumen initially-in-place R7 Grizzly 100% Lease Oil Pipeline System Gas Pipeline System Road Delineation Wells R6 R5 R4 R3 Producing Project Under Construction Project Planned Project Mining Region 2010 Prior to 2010 Expected to Support Multiple 10,000 bbls/d Project Phases R2W4 28

29 Saleski West - Carbonates 100% W.I. in 5,693 contiguous acres Laricina s Saleski carbonate SAGD pilot is 3 km southwest first application of SAGD to carbonate reservoirs 187 mmbbls of contingent resources T87 Grosmont carbonate reservoir: Uppermost units laterally extensive with pay thickness up to 17 metres Average bitumen saturation is 77% T86 Grizzly 100% Lease Oil Pipeline System Gas Pipeline System Road Delineation Wells Producing Project Under Construction Project Planned Project Mining Region 2010 Prior to 2010 T85 R20 R19 R18 R17 R16W4 Development Dependent on Industry Carbonate Pilot Successes 29 29