Solid results, significant upside NOVEMBER 2016 INVESTOR PRESENTATION OSUM OIL SANDS CORP.

Transcription

1 Solid results, significant upside NOVEMBER 2016 INVESTOR PRESENTATION OSUM OIL SANDS CORP.

2 Disclaimer Forward Looking Statements This presentation contains statements that may constitute "forward-looking statements within the meaning of applicable securities legislation. These statements include, among others, statements regarding business strategy, beliefs, plans, goals, objectives, assumptions or statements about future events or performance. By their nature, forward looking statements are subject to numerous risks and uncertainties, some of which are beyond the Company's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, environmental risks, competition from other industry participants, lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect and, as such, undue reliance should not be placed on forward-looking statements. Actual results, performance or achievement could differ materially from those expressed in, or implied by any forward looking statements in this presentation, and accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits the Company will derive therefrom. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Reserves and Resources Except where noted to be from another source, the reserve estimates herein were extracted from reports prepared by GLJ Petroleum Consultants Ltd. (GLJ), an independent professional petroleum engineering firm, in accordance with Canadian Securities Administrators National Instrument (NI ) and the Canadian Oil and Gas Evaluation Handbook (COGEH). Under NI , proved reserves are those reserves which can be estimated with a high degree of certainty to be recoverable. It is 90 percent likely that actual remaining quantities will exceed estimated proved reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of proved plus probable reserves. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is only a 10 percent probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves. The preparation of an evaluation requires the use of judgement in applying the standards and definitions contained in COGEH and NI As the Company s independent reserve evaluator, GLJ applies those standards and definitions based on its experience and knowledge of industry practice. However, because the application of the standards and definitions contained in COGEH and NI require the use of judgement there is no assurance that governing securities regulator(s) will not take a different view than GLJ as to some of the determinations in an evaluation. Presentation of Financial Information Unless otherwise stated, all figures presented are in Canadian Dollars. 2

3 Solid results, significant upside Pure-play, private oil sands company. Currently producing approximately 8,000 barrels per day. Able to generate solid returns in a moderate oil price environment. Significant upside potential. Smart, lower-risk growth opportunities. Orion: Phase 1 Cold Lake, Alberta 3

4 Company overview QUALITY ASSETS HIGH-RETURN, Premium reservoir quality and scale. STAGED GROWTH OPPORTUNITIES Near-term short-cycle brownfield opportunities plus significant upside potential in the long term. OIL PRICE TORQUE A small increase from today s oil prices significantly adds to Osum s value. SOLID FINANCIAL POSITION Prudent approach that balances growth with judicious spending. 4

5 Cold Lake: A cut above in quality High quality reservoir: Continuous, thick, scalable. In an area that provides 10% of Canada s daily oil production. Access, infrastructure, closer to Edmonton and US markets. Current production of about 8,000 barrels per day (Orion). Options for phased growth. Two approved projects within a dozen miles of each other (Orion Expansion and Taiga). 5

6 Cold Lake: A cut above in price $30 H Realized Bitumen Price Cold Lake Athabasca $25 $20 $23.33 $22.22 $22.21 $21.79 Higher quality bitumen yields better netbacks. Positive field netbacks at oil prices above WTI US$40/bbl. $15 $14.89 $14.61 Source: Company reports. Prices are net of transportation & blending and exclude financial hedges. $10 $5 ~$1.50 $0 Osum Husky CNRL Pengrowth (Lindbergh) MEG Cenovus Oil Sands Connacher 6

7 Solid results 10,000 Boiler outage Bitumen production Steam injection Average production 6,000 4 perfs & 1 re-drill Turnaround Boiler outage Bitumen Production (bbl/day) 7,500 5,000 2,500 4,500 3,000 1,500 Steam Injection (T/d) Before Osum s Acquisition After Osum s Acquisition

8 Moving forward: Smart, small steps. Orion Plus brownfield expansion projects currently underway. Adds to existing water treatment capacity. Orion Plus: Team commencing with installation of additional boiler August 2, 2016 Cold Lake, Alberta Boosts production by late Reduces evaporator waste stream. Reduces trucking and disposal costs. Increases water recycle rate. 8

9 Brownfield expansion: Shovel ready, path to 20,000 bbls/day Approval in hand. Opportunity to approach in stages or single step depending on business conditions. Generates a 20%+ $50 WTI. Proven reservoir (more of the same). Major equipment has been purchased. By Melanie Collison and 9 Deborah Jaremko

10 Growth strategy 60,000 50,000 Taiga: Phase 3 40,000 30,000 20,000 10,000 Taiga: Phase 2 Taiga: Phase 1 Brownfield Expansions Current Production: Orion Orion Plus Staged, manageable approach. 100% control Cold Lake: Regulatory Approval in Hand for All Projects (55,000 bbls/day) 10

11 Significant Upside 3,000 2,250 1, Cold Lake Proven plus Probable Reserves Source: GLJ Petroleum Consultants Saleski Carbonates Best Estimate Contingent Resources (Unrisked) Source: GLJ Petroleum Consultants 11

12 Significant upside: The Carbonates Osum holds a sizeable first mover position in an enormous resource. Exceptional reservoir quality. Pilot results have shown the potential for commercial development. Next step is a demonstration project to prove commercial performance. Carbonate Core: Grosmont C 12

13 About the pilot. Proved bitumen recovery from the Grosmont C&D zones. Over 300,000 barrels of bitumen produced. Grosmont C progressed the furthest. 4D seismic showed good steam conformance. Performance metrics from pilot wells were near commercial range (without the benefit of field-scale optimization). Drilling and completion techniques proved effective. Grosmont Carbonate Pilot (Operated ) 13

14 Oil price torque Oil Production Potential (MBbls/d) Carbonates 2.5 Bln bbls BEC Resource Clastics 377 MMbbls BEC Resource Taiga: 376 MMbbls 2P Reserves Orion Expansion: 79 MMbbls of Probable Reserves Orion Operations: 46 MMbbls 1P Reserves WTI Oil Price (USD/bbl) 14

15 Solid financial position $184MM net working capital, US$15mm undrawn revolver. $270MM covenant light term loan maturing in Active rolling commodity hedging program covering about 50% of production for the first 12 months and 25% for the next. Prudently managing spending within context of current environment. Supportive shareholder base. 15

16 Summary QUALITY ASSETS HIGH-RETURN, STAGED GROWTH OPPORTUNITIES OIL PRICE TORQUE SOLID FINANCIAL POSITION Solid results, significant upside. 16