TD Calgary Stampede Energy Conference. Glen Schmidt President and CEO

Transcription

1 TD Calgary Stampede Energy Conference Glen Schmidt President and CEO July 9, 2013

2 Laricina Advantages Significant, High Quality In Situ Asset Base Near-term Fully-funded Commercial Production at Germain Successful Saleski Pilot Validates the Carbonates Strong Financial Position Third largest pure play holder of oil sands resource in Canada (1) 500,000+ bbl/d net production potential, with medium term target of 42,500 bbl/d net 4.2 bn of contingent resources and 466 mm probable reserves (2) Diversified across four bitumen formations with clean, continuous Grand Rapids sands and sweet spot Grosmont carbonates Large concentrated development platform at Germain/Saleski enhances project cost efficiencies First steam at Germain Commercial Demonstration Project achieved June 2013, first production expected in Q (5,000 bbl/d net capacity) Significant analogous development activity in close proximity (e.g. Cenovus) 1.4 bnbbl of contingent resources in Grand Rapids and Winterburn and 389 mmbbl probable reserves in Grand Rapids (2) First carbonates production March 2011; demonstrated commerciality (>1,200 bbl/d peak well rate) Near-term commercial development will utilize C-SAGD to accelerate initial carbonate production; cyclic steam processes in use since 1980s 1.6 bnbbl of contingent resources and 76 mmbbl probable reserves (2) Strong balance sheet $258 mm working capital on hand (as of March 31, 2013) No debt or related interest expense Flexibility to tailor expected growth to capital availability Supportive Shareholders Raised $1.3 bn in equity from 15 private equity raises since 2005 Supportive institutional shareholders 100% equity financed business to date Proven Management Team and Board Leading oil sands sector management team with 30 years average experience Strong technical and operational expertise positions the company to successfully build and operate commercial projects Experienced board offers diverse expertise (1) See slide 6. (2) GLJ Report, effective December 31, July 9, 2013 WE PRODUCE 2

3 Corporate Profile Capitalization (April 30, 2013) Basic Officer & director ownership (1) Fully diluted March 31, 2013 working capital Credit Facility Probable reserves (2) Best estimate contingent and prospective resources (2) Net Present Value (probable reserves, before tax 10%) (2) 67.2 million shares 4.9% of basic 72.9 million shares $258 million $15 million revolving credit facility 466 million bbl 4,509 million bbl $543 million Net Present Value (best estimate contingent and prospective, before tax 10%) (2) $8.5 billion Net oil sands land position (3) 204,316 acres Management target 42,500 bbl/d of net installed production capacity in the medium term Cash financing history (cumulative) $1.3 billion (100% equity) Cumulative Capital Raised (C$ mm) $1,400 $1,200 $1,000 $800 Laricina has raised $1.3 billion in cumulative equity since inception Strong financial sponsors $600 $400 $200 $ (1) Excluding CPP Investment Board which own 15.9% and Lime Rock Partners which own 12.8%. (2) GLJ Report, effective December 31, (3) As at December 31, July 9, 2013 WE PRODUCE 3

4 Industry Leading Oil Sands Team Senior Management Glen Schmidt President & CEO Jim Hand SVP & COO Dean Setoguchi SVP & CFO Derek Keller VP, Production Prior President, CEO and Director of Deer Creek (a public oil sands company) Past Chairman of the In Situ Oil Sands Alliance (IOSA), and former member of CAPP s board of governors Previous President of Torex Resources and Pioneer Natural Resources Canada Director of Argent Energy and Elkhorn Resources Former VP Oil Sands Operations ConocoPhillips More than 30 years experience in the oil and gas sector in a variety of technical, managerial and leadership positions Former VP and CFO Keyera Corp. Previously VP and CFO Cordero Energy Inc. More than 20 years experience in capital markets, investor relations, finance, treasury and strategic planning in the oil and gas industry Former Business Development Manager with Murphy Oil and Operations Engineer with Amoco Canada More than 23 years of oil and gas experience most of which in heavy oil and oil sands businesses Laricina Team and their Achievements Talented and dedicated team of more than 300 employees, contractors and consultants - Extensive oil sands experience having worked on 49 individual in situ oil sands and thermal heavy oil projects including: Christina Lake, Firebag, Foster Creek, Mackay, Primrose and others - Industry veterans drawing on experiences from a range of companies including: Deer Creek Energy Ltd. Canadian Natural Resources Ltd. Connacher Oil & Gas Ltd. OPTI Canada Inc., ConocoPhillips Company MEG Energy Corp. Suncor Energy Inc. Petro-Canada Blackrock Imperial Oil Ltd. Shell Canada Ltd. Murphy Oil Corp. EnCana Corp. Husky Energy Inc. JACOS Ltd. Nexen Inc. Karen Lillejord VP, Finance & Controller David Safari VP, Facilities Marla Van Gelder VP, Corporate Development Director Board Members Background Ian Bruce Former CEO and Co-Chairman of Peters & Co. Limited Jeff Donahue Jr. Jonathan Farber S. Barry Jackson Vice President - Principal Investing CPPIB Equity Investments Co-founder and Managing Director of Lime Rock Partners Chairman of the Board of TransCanada since April 2005 Gordon Kerr Former President and CEO of Enerplus Brian Lemke Robert Lehodey Former Controller with Deer Creek More than 28 years of experience in the area of corporate reporting Previously held management positions with Ernst & Young, Wascana Energy, Nexen, and AltaGas Former Senior Project Director with Statoil Canada and Kellogg Joint Venture in Australia More than 26 years in the energy industry Former Manager, Financial Analysis with Deer Creek Previously a Manager, Commercial Banking Oil & Gas with CIBC from 1993 to 2000 More than 23 years of combined banking, finance, and oil and gas experience Chairman of Laricina, Founder of Resolute Energy Inc. in 2001 Partner at Osler, Hoskin & Harcourt LLP since March 2006 Glen Russell Principal of Glen Russell Consulting since 1998 Glen Schmidt President and CEO of Laricina July 9, 2013 WE PRODUCE 4

5 Asset Portfolio Overview Portfolio of strategic in situ oil sands assets focused on minimizing supply costs Burnt Lakes Targeted approach to development (scale, quality, proximity to infrastructure) Ten oil sands properties with exposure to four bitumen-bearing formations; well balanced portfolio Boiler Rapids Conn Creek Poplar Creek Geographic concentration of assets Five areas identified for development with two under active development Germain Saleski Fort McMurray Saleski pilot (production achieved March 2011) Germain Phase 1 (first steam achieved June 2013, first production expected in fall 2013) House River Operatorship of 100% of properties Staged development plan will drive value Wabasca Thornbury West Thornbury Laricina Property Portage McMurray bitumen trend > 10 metres Grosmont sub crop Nisku sub crop Grosmont bitumen trend > 18 metres Grand Rapids bitumen trend > 18 metres July 9, 2013 WE PRODUCE 5

6 Suncor Imperial Husky CNRL Cenovus AOC CNOOC Shell MEG Sunshine Laricina PetroChina Recoverable Resource (bnbbl) Osum BP Total Significant Resource Base All figures represent Laricina W.I. Germain Formation (W.I.) 2P Reserves Asset Overview (1) Best Estimate Contingent Resources Best Estimate Prospective Resources Net Production Potential Best Estimate Contingent Recovery Factors Incremental SC-SAGD Recoverable Resources (mmbbls) (mmbbls) (mmbbl) (bbl/d) (mmbbl) Grand Rapids ,000 56% 244 Winterburn ,000 30% - Germain Total (100%) 389 1, , Saleski Grosmont (60%) 76 1, ,500 39% 365 Burnt Lakes Grosmont (100%) ,000 29% - Conn Creek McMurray (100%) ,000 42% - Poplar Creek McMurray (100%) ,000 50% - Other McMurray / Grand Rapids % - Total 466 4, , Columns may not add due to rounding. Top Oil Sands Players (1) (1) 3 rd largest pure play oil sands position (1) GLJ Report, effective December 31, Source: Company disclosure. Assumes Dover put/call option exercised between AOC and PetroChina. Recoverable Resource includes 2P + best estimate contingent and prospective resources. Light blue denotes pure oil sands players. Concentrated operations at Germain and Saleski Assets outside of Germain and Saleski offer inventory for future growth Innovation to enhance value a core component of Laricina s business model WE PRODUCE July 9, ( 1 )

7 Net Installed Capacity (bbl/d) Near-Term Targeted Commercial Capacity 50,000 40,000 30,000 Germain Phase 2 (30,000 bbls/d net) Saleski Phase 1 (6,420 bbld/d net) Germain CDP (5,000 bbls/d net) Saleski Pilot (1,080 bbld/d net) 42,500 20,000 12,500 10,000 6,080 6, Medium Term Goal Project - Phase Regulatory Application Current Status Targeted Capacity (Gross bbl/d) Saleski - Pilot Approved Operating 1,800 Germain - Phase 1 Commercial Demonstration Approved Operating 5,000 Saleski - Phase 1 Update filed Oct 2012 Germain - Phase 2-4 Filed Nov 2011 Approval expected mid 2013 Approval expected , ,000 First commercial production expected in Q Two areas under active development (Germain and Saleski) drive a flexible, phased growth plan Laricina plans to access capital markets as appropriate to fund its business plan Management target installed net capacity of 42,500 bbl/d in medium term Additional financing required for Saleski Phase 1 July 9, 2013 WE PRODUCE 7

8 Original oil in place (bn bbl) The Next Big Oil Sands Plays Increasing industry focus on the Grand Rapids and Grosmont formations 600,000 bbd/d of production capacity planned in the Grand Rapids from projects that are approved, pending approval or announced by Laricina, Cenovus, BlackPearl, Cavalier and others Laricina has the first thermal horizontal well pilot in the Grosmont Other operators: Suncor, Husky, Shell, Cenovus, OSUM Saleski and Germain collectively represent one of the largest platforms in the oil sands region 1, W McMurray Mineable Alberta's Bitumen Resource Trillion Barrels in situ Athabasca Cold Lake Peace River W McMurray In-Situ Grosmont Nisku Grand Rapids Bluesky-Gething Clearwater Grand Rapids Source: ERCB Reserves 2011 and Supply/Demand Outlook Debolt Wabiskaw-McMurray Shunda Belloy July 9, 2013 WE PRODUCE 8

9 Infrastructure Primarily in Place Core infrastructure well advanced Portions pre-built for commercial phases Infrastructure Status Supported Project Capacity Road Access Complete All Requires maintenance annually Power Germain complete Saleski AUC approval Up to 100,000 bbl/d Germain and Saleski Natural Gas Complete Supports Saleski Phase 1 and Germain Phase 2; simple and cost effective expansion Synergistic opportunities for capital, operating and environmental management Proximity to proposed regional pipeline systems (ie. Stony Mountain Pipeline and Grand Rapids Pipeline) July 9, 2013 WE PRODUCE 9

10 Germain Area: 44,161 acres, 100% w.i. Formation 2P Reserves (bn bbl) (1) Best Estimate Contingent Resources (bn bbl) (1) Production Potential (bbl/d) (1) Grand Rapids ,000 Winterburn ,000 Total ,000 Germain CDP s Central Processing Facility (CPF) (June 2013) Germain Phase 1 being developed using SC- SAGD, which provides economic and environmental benefits over SAGD Commercial Demonstration Project (CDP) - Phase 1 - Located in the west Athabasca Grand Rapids - 5,000 bbl/d production capacity - Incorporates water recycle - Direct to SC-SAGD - First steam achieved June 2013, with first production targeted for Q $410 million projected capital costs including shared infrastructure and pre-build for future phases, commissioning and start-up, and capital costs into 2014, $25 million below forecast - Fully-funded Delineation at Germain provides geological confidence - Grand Rapids (primary target): 172 delineation wells and 12.8 km2 3-D seismic - Winterburn (secondary target): 20 delineation wells and 90.1 km 2-D seismic (1) GLJ Report, effective December 31, July 9, 2013 WE PRODUCE 10

11 Germain CDP Site Storage Tanks Truck Terminal Water Treatment Office/Operations Maintenance Bitumen Treatment Steam Generation Pipe Rack Well Pad June 12, 2013 July 9, 2013 WE PRODUCE 11

12 Regional Development of the Grand Rapids July 9, 2013 WE PRODUCE 12

13 Germain Commercial Growth Manageable phased development plan allows for de-risking, management of corporate resources and activity levels, and applying what we have learned to future phases Staged growth helps to manage capital needs and costs Germain commercial expansion to target 155,000 bbl/d CDP infrastructure (including gas, power and roads) sufficient to support first two phases (35,000 bbl/d production capacity) Subsequent phases planned to provide a total of 205,000 bbl/d production capacity from the Grand Rapids EIA submitted Nov 2011; approval expected 2013 July 9, 2013 WE PRODUCE 13

14 Saleski Area: 42,880 acres (gross) 60% w.i. Formation 2P Reserves (net mmbbl) (1) Geology Located at the Grosmont Sweet Spot Excellent pay thickness in targeted areas, can exceed 50 m Excellent permeability, high oil saturation; well productivity exceeds average McMurray Pilot Facilities & Operations 1,800 barrel per day production capacity Four horizontal well-pairs successfully drilled in the Grosmont (two in the D, two in the C) Facility optimization in 2012 added second steam generator, ongoing plant debottlenecking to advance C-SAGD operations Commercial Project Phase 1 commercial expansion 10,700 bbl/d capacity project currently advancing engineering Initial construction expected to start in 2013 with funding (1) GLJ Report, effective December 31, July 9, 2013 Best Estimate Contingent Resources (net bnbbl) (1) Production Potential (gross bbl/d) (1) Grosmont ,500 Total ,500 WE PRODUCE April 2012 Trucks transporting bitumen from Saleski Trucking bitumen from the Saleski pilot 14

15 Steam Conformance Surmont SAGD in McMurray 102 South, Jan 2012, on steam since 2008 Saleski Excellent injectivity along the full length of wells Laterally confined Just developing well communication Saleski pilot 4-D seismic showing heataffected region Steam condenses into water - releases heat, reduces viscosity I2D P2D I2C P2C I1D P1D I1C P1C Legend Injection Production Shut-in At the time of seismic acquisition. July 9, 2013 WE PRODUCE 15

16 fracture Viscosity (cp) Recovery from Fractured Carbonate Create Mobility Reduce viscosity by injecting steam Drive Mechanisms Thermal Expansion Fractures to well Matrix to fractures 5-10% recovery factor Imbibition Water (condensed steam) is pulled into matrix Bitumen is driven into fracture 25-35% recovery factor Gravity Drainage Density difference Viscosity Vertical matrix permeability 30-60% recovery factor Note: Drive mechanism recovery factors are Laricina estimates and based on analogs and calculated theoretical values. July 9, 2013 WE PRODUCE 16

17 Production Performance is Meeting C-SAGD Forecast The pilot has recovered more bitumen for the steam injected than expected Oil in place = oil saturation * pore volume Pore volume = porosity * rock volume around the well P1C (1) and P2C (2) Steam Injection and Recovery P1D (3) Steam Injection and Recovery (1) As at the end of P1C s last production cycle - March 6, (2) As at the end of P2C s last production cycle - April 14, (3) As at the end of P1D s last production cycle - January 23, July 9, 2013 WE PRODUCE 17

18 Saleski Phase 1 Commercial Plan Project update filed to reflect C-SAGD for the Grosmont C Project update filing for Grosmont D wells to follow Project well defined, engineering work underway Expected recovery factor 35-45%; with solvent +48% Grosmont initial projections: CSOR 3 3.5; CDOR bbl/d C only; bbl/d combined C and D zones Bitumen target capacity, 10,700 bbl/d, installed SOR 3.9 Current cost estimate, gross full cycle (drilling, facilities, contingency) = ~$520 MM Additional opportunities to reduce costs underway Phase 1 will advance commercial operational and reservoir understanding for future development of the Grosmont with a multi-well field development through phases 2 6 C-SAGD: Single well horizontal cyclic recovery Grosmont D Grosmont C The current engineering, drilling and construction schedules may not proceed as planned. Availability of financing and delays in obtaining, or conditions imposed by, regulatory approvals may affect the current development timing. Start-up refers to initial steaming of the wells, with full production expected 12 months after start-up. July 9, 2013 WE PRODUCE 18

19 Truck and Rail Terminal Strategy Transition Long-term to Pipe A number of truck locations provide flexibility and price competition for Saleski and Germain delivery options Increasing number of new rail projects have been announced over the last three months Sufficient truck/rail terminal capacity expected to be in place for production through Q Laricina s strategic location allows for maximizing netbacks Currently blending a large percentage of our production into higher priced streams Long-term pipeline strategy underway with proposed regional pipeline solutions Fox Creek Truck terminals High Prairie Valleyview Swan Hills Judy Creek Drayton Valley Enbridge Mainline Edmonton Feeder System Proposed Stony Mountain Pipeline Proposed Grand Rapids Pipeline Rail terminals CN/CP Rail lines Hardisty July 9, 2013 WE PRODUCE 19

20 Next Months Expected Milestones Saleski Regulatory approval for Phase 1 expected mid 2013 Refine C-SAGD optimization Continue to test interaction between Grosmont C and D zones at pilot and commercial recovery scheme for Grosmont D Multiple cycles of steam injection and solvent trials in the Grosmont D Prepare for earthworks and construction for Phase 1 by Q Germain First production targeted for Q Progress regulatory application for commercial Phases 2 4 to increase to 155,000 bbl/d total capacity; approval expected 2013 Growth Projects Advance development strategy for Burnt Lakes, Poplar Creek and Conn Creek Technology and Innovation Test new recovery techniques and advance studies (i.e. upgrading, modularization design, solvent addition) Advance other innovation ideas for reducing diluent, field upgrading and TAN reduction July 9, 2013 WE PRODUCE 20

21 We Produce Developing the Grand Rapids, building out Germain Producing from the Grosmont at Saleski Investing in value enhancing innovations Growth opportunities in carbonates and sands July 9, 2013 WE PRODUCE 21

22 Forward-Looking Statements Advisory This Laricina Energy Ltd. (the Company ) presentation contains certain forward-looking statements. Forward-looking statements may include, but are not limited to, statements concerning estimates of exploitable original-bitumen-in-place, predicted recovery factors, steam-to-oil ratios and well production rates, estimated recoverable resources as defined below, expected regulatory filing, review and approval dates, construction and start-up timelines and schedules, company project potential production volumes as well as comparisons to other projects, statements relating to the continued overall advancement of the Company s projects, comparisons of recoverable resources to other oil sands projects, estimated relative supply costs, potential cost reductions, recovery and production increases resulting from the application of new technology and recovery schemes, estimates of carbon sequestration capacity, costs for carbon capture and sequestration and possible implementation schedule for carbon capture and sequestration processes or related emissions mitigation or reduction scheme and other statements which are not historical facts. You are cautioned not to place undue reliance on any forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both generally and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur. Although the Company believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct and, accordingly that actual results will be consistent with the forward-looking statements. Some of the risks and other factors that could cause results to differ materially from those expressed in the forward-looking statements contained in this presentation include, but are not limited to geological conditions relating to the Company s properties, the impact of regulatory changes especially as such relate to royalties, taxation and environmental changes, the impact of technology on operations and processes and the performance of new technology expected to be applied or utilized by the Company; labour shortages; supply and demand metrics for oil and natural gas; the impact of pipeline capacity, upgrading capacity and refinery demand; general economic business and market conditions and such other risks and uncertainties described from time to time in the reports and filings made with security regulatory authorities, contained in other disclosure documents or otherwise provided by the Company. Furthermore the forward-looking statements contained in this presentation are made as of the date hereof. Unless required by law the Company does not undertake any obligation 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 in this presentation are expressly qualified by this advisory and disclaimer. July 9, 2013 WE PRODUCE 22

23 Significant Definitions In this presentation the reserve and recoverable resource numbers, along with the net present values given, are as defined in the report of GLJ Petroleum Consultants Ltd. ( GLJ ) regarding certain of Laricina s properties effective December 31, 2012, referred to herein (the GLJ Report ). Exploitable OBIP or Expl. OBIP refers to original-bitumen-in-place that is targeted for development using thermal recovery technologies. The best and high estimate of the Company s resources include contingent and prospective resources. Cont. or 2C and Pros. refer to contingent and prospective bitumen resources, respectively. Contingent resource values have not been risked for chance of development while prospective resource values have been risked for chance of discovery but not for chance of development. There is no certainty that it will be commercially viable to produce any portion of the contingent resources. There is no certainty that any portion of the prospective resources will be discovered or, if discovered, if it will be commercially viable to produce any portion of the prospective resources. 2P means proved plus probable reserves and 3P means proved plus probable plus possible reserves. SAGD means steam-assisted gravity drainage. C-SAGD means cyclic SAGD. SC-SAGD means solvent-cyclic SAGD. CSS means cyclic steam stimulation. The SC-SAGD best estimate technology sensitivity (Laricina technology sensitivity) net economic forecasts were prepared on Saleski-Grosmont and Germain-Grand Rapids based on SC-SAGD technology. SOR means steam-oil ratio. CSOR means cumulative steam-oil ratio. CDOR means calendar day oil rate. bbl means barrel. bn means billions. m means metres. mmbbl means millions of barrels. bbl/d means barrels per day. EIA means Energy Information Administration. NPV means net present value. m 3 means cubic metres. m 3 /d means cubic metres per day. kpa means kilopascal. Dkeff means Darcy s effective permeability. km 2 means square-kilometres. NPV10 means net present value, before tax, 10 percent discount. US$ means United States dollars. U.S. means United States of America. WTI means West Texas Intermediate. WCS means Western Canadian Select. PV10 means net present value before tax, 10 percent discount. Unless otherwise stated, all dollar amounts are shown in Canadian dollars (C$). July 9, 2013 WE PRODUCE 23

24 Contact Us Laricina Energy Ltd. 800, st Street SW Calgary, Alberta T2P 3L laricina@laricinaenergy.com July 9, 2013 WE PRODUCE 24