August 2008 Corporate Presentation

Transcription

1 August 2008 Corporate Presentation

2 Cautionary Statements Statements in this presentation may contain forward-looking statements including management s assessment of future plans, operations, expectations of future production and capital expenditures. Information concerning reserves may also be deemed to be forward-looking statements as such estimates involve the implied assessment that the resources described can be economically produced. These statements are based on current expectations that involve numerous risks and uncertainties, which will cause actual results to differ from those anticipated. These risks include, but are not limited to: the risks of the oil and gas industry (e.g. operational risks in exploration, development and production; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), fluctuation in foreign currency exchange rates and commodity price fluctuation. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. In addition, the THAI /CAPRI processes and other technologies are early stage and future results may differ from those anticipated. References to "contingent resources" or "resources" in this presentation do not constitute, and should be distinguished from, references to "reserves". "Reserves" are those remaining quantities of oil and gas anticipated to be economically recoverable from these known accumulations from a given date forward. "Resources" are oil and gas volumes that are estimated to have originally existed in the earth's crust as natural accumulations but are not capable of being classified as "reserves", and "contingent resources" are a sub-category of resources that means those quantities of oil and gas estimated to be potentially recoverable from known accumulations but which cannot be classified as "reserves" for a variety of reasons, including that they may not be currently economic. This presentation contains financial terms that are not considered measures under Canadian generally accepted accounting principles ( GAAP ), such as funds flow from operations, funds flow per share, net debt and operating netback. These measures are commonly utilized in the oil and gas industry and are considered informative for management and shareholders. Specifically, funds flow from operations and funds flow per share reflect cash generated from operating activities before changes in non-cash working capital. Management considers funds flow from operations and funds flow per share important as they help evaluate performance and demonstrate the Company s ability to generate sufficient cash to fund future growth opportunities and repay debt. Net debt includes bank debt plus income taxes payable plus accounts payable and accrued liabilities less cash and cash equivalents less accounts receivable and other current assets, and is used to evaluate the Company s financial leverage. Profitability relative to commodity prices per unit of production is demonstrated by an operating netback. Funds flow from operations, funds flow per share, net debt and operating netbacks may not be comparable to those reported by other companies nor should they be viewed as an alternative to cash flow from operations, net income or other measures of financial performance calculated in accordance with GAAP. Natural gas volumes have been converted to barrels of oil equivalent ( boe ). Six thousand cubic feet ( mcf ) of natural gas is equal to one barrel based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Boes may be misleading, especially if used in isolation. Business Unit Structure Three Strong Business One Powerful Company Shares outstanding million Insiders control - 10% (basic) Market cap TSX:PBG - $3.1 billion Market cap TSX:PMG - $1.2 billion (PBG share = $0.9 billion) 76% 1

3 Q Strength in our Results Financial % change Oil and natural gas revenue 241,791 36, Funds flow from operations 177,923 21, diluted (per share) Net income 57,636 16, diluted (per share) Operations Canadian operating netback Latin American operating netback Average daily production CBU (boepd) 16,517 4, LABU (bopd) 7,339 2, Total Company conventional (boepd) 23,856 6, Q Operating Netbacks High Value Production LABU Wellhead price differential $9.26 (7% of WTI) Royalties $11.11 Production costs $10.86 CBU AVERAGE Average WTI price C$ Wellhead price differential $15.60 (12% of WTI) * 14% natural gas Royalties $11.70 Production costs $8.88 CBU Bakken Wellhead price differential $7.09 (6% of WTI) Royalties $8.14 Production costs $8.91 Operating netback $93.80 Operating netback $88.85 Operating netback $

4 Canadian Business Unit A Strong Platform Q2 2008: 16,517 boepd (Bakken: 13,000 boepd) Early August > 17,500 boepd 3P reserves 65.8 mmboe PBG drilled 75 net Bakken horizontal wells in the first half of 2008, we plan to drill at least 154 net Bakken wells by year end. 450,000 net acres of undeveloped land High-impact exploration success Application of new technologies to large resource opportunities High Impact Potential Stacked Exploration & Large Resource Opportunities Northeast British Columbia Northwest Alberta Three exciting areas for conventional exploration, production and resource play development. Currently producing gas from Bluesky & Halfway at Silver/Bubbles. Cornwall discovery 25 mmcf/d facility planned for 09 Anticipate drilling at least 3 new wells in 2008 Applying technology to large resource plays 25 Horn River sections Acquiring Privateco with 14 Montney sections, 148 bcf best est. contingent recoverable, 2 wells & facility for $53MM 36 miles 3

5 SE Saskatchewan - Bakken Unlocking the Potential Transgas Enbridge 156,000 gross (141,000 net) undeveloped acres on the Bakken play Plan to drill 154 net Bakken horizontal wells in 2008 Remaining drilling inventory of ~ 577 net locations (using 4 wells per section) 155 net wells drilled to Q Sproule has only assigned 171 development locations in their 12/31/07 3P evaluations Saskatchewan - Bakken Maximizing Exposure to the Reservoir 1,500m horizontal wells are drilled perpendicular to natural fractures Each horizontal well is offset 400m from its neighbour(s) Frac s are contained within Bakken zone 8 isolated/unique fracture stimulations are applied per well Frac s are staggered between adjacent well bores 4

6 Saskatchewan - Bakken Bakken Fracture Stimulation Packers isolate each frac interval along the well bore Frac ports individually open during sequential fracing from toe to heel Frac string design is unique for each well to optimally access reservoir and intervals are staggered to minimize interference with adjacent wells Slow frac injection rates keep frac growth contained within the formation Saskatchewan - Bakken Efficient Pipeline Layout 5

7 Bakken Production PBG Wells Exceeding Expectations Oil rate - recent weekly average (bopd) Cumulative oil (bbls) PBG wells Sproule 3P 150 mbbl case Bakken Per-Well Economics Without Conservation of Gas & NGLs Drilling, completion and tie-in cost = $1.9 million 3P reserves per well = 150,000 bbl F&D costs = $12.87/bbl Avg. production year 1 = 94 bopd WTI Case $80 $100 $120 NPV 10% before tax (000 s) $3,186 $4,553 $5,920 IRR 169% 341% >500% Avg. life-of-reserves netback $59.04 $77.16 $95.16 Recycle ratio

8 Bakken Per-Well Economics With Conservation of Gas & NGLs (Innes Area) Drilling, completion and tie-in cost = $2.0 million 3P reserves per well=150,000 bbl+35,000 boe=185,000 boe F&D costs = $10.81/bbl Avg. production year 1 = 105 boepd WTI Case $80 $100 $120 NPV 10% before tax (000 s) $3,982 $5,558 $7,135 IRR 234% 483% >500% Avg. life-of-reserves netback $57.21 $74.09 $90.98 Recycle ratio Bakken Platform Drilling & Facilities Entered the year with 80 net producing Bakken well and 624 net drilling locations Plan to drill 154 net wells in 2008 Most active driller in the Bakken Constructing 2 new facilities to capture liquids-rich natural gas 7

9 Innes / Midale Oil Battery Oil Battery and Gas Plant Canadian Business Unit Multi-Year Growth Strategy Inventory of over 800 drilling locations Drilling 154 net Bakken horizontal wells in 2008 Expanding inventory of gas locations in Alberta and British Columbia High impact exploration Application of new technologies to large resource opportunities Leverage extensive undeveloped land base Continue to expand production platform for longterm sustainable growth 8

10 Colombian Assets Production, Exploration & Heavy Oil Llanos Basin (Exploration) Neiva (IPC) Orito (IPC) Las Aguilas (Exploration) Petrominerales is one of Colombia s Largest Land Holders Orito Caballos Formation Drilling Locations Existing Caballos wells 13 Petrominerales locations 48 D&M locations 9

11 Corcel Locations Unlocking the Potential All weather road Corcel-C1 Corcel-B Corcel-B* Corcel-C3** Corcel-C Corcel-E1* Corcel-F1* Corcel-F1 Corcel-E1 Corcel Corcel D3** D3 Corcel D1 (4) Corcel D1* Four additional prospects* Three delineation locations** 3D seismic only covered 15% of the 79,815 acre block Adjoining Guatiquia Block 26,341 acres Corcel-A3 Corcel-A3 Corcel-A1 Corcel-A1 Corcel-A2 Corcel-A2 Corcel-A4 Corcel-A4 Corcel Corcel D2** D2 Corcel Developing the Discovery CORCEL-A3 CORCEL-A4 CORCEL-A2 UPPER MIRADOR CORCEL-A1 CORCEL-FAULT? LOWER MIRADOR LOWER MIRADOR GUADALUPE 3A&3B GUADALUPE 2 & 1 LOWER SAND 1? UPPER MIRADOR LOWER MIRADOR GUADALUPE 3A&3B GUADALUPE 2 & 1 OIL SHOWS LOWER SAND 2? LOWER SAND 3?? LOWER SAND 1 LOWER SAND 2 OIL SHOWS CONGLOMERATE? LOWER SAND 3 CONGLOMERATE 10

12 GR AT AT AT AT AT Corcel A New Exploration Trend A2 A3 A4 A1 A4 F1 E1 C1 D3 D1 D2 A2 A3 A1 Corcel Corcel-C Discovery CORCEL-C1 635 Corcel-C GUADALUPE [LDR Intervals to be tested in C Corcel-A Corcel-C1 Corcel-A1 Intervals currently being tested in C LS1 [LDR] Fault Oil migration path 11

13 Corcel Long-Term Exploration and Development Potential Guatiquia 3D acquired Corcel 3D acquisition in progress All weather road Corcel-E1* Corcel-F1* Corcel-E1 Corcel-F1 Corcel-C1 Corcel-C Corcel-C3** Corcel-B* Corcel-B Corcel D3 Corcel D3** Corcel D1 Corcel D1* (4) Corcel-A3 Corcel D2 Corcel D2** Corcel-A3 Corcel-A2 Corcel-A2 Corcel-A1 Corcel-A1 Corcel-A4 Corcel Production Facilities 12

14 Llanos Basin Exploration 1.6 million acres Extensive 2D & 3D seismic coverage Significant heavy oil potential THAI TM applicability Llanos Basin Exploration Heavy Oil Leads 13

15 Heavy Oil Blocks PMG Seismic Activity Pre-existing seismic in black. PMG 2D seismic in red Proposed PMG 3D seismic in green Chiguiro Oeste 160 km 2D Chiguiro Este 48 km 2D, 62 km 2 3D Rio Ariari 416 km 2D 10 km Heavy Oil SA-13 Well Core Showing Oil Stained Carbonera (4,826ft) 14

16 Heavy Oil Bid Round Western Round Deadline for bids is October 27 th, 2008 Chiguiro Oueste Chiguiro Este Rio Ariari Petrominerales Blocks Petrominerales Strengths Long-Term Growth Platform Producing assets and reserves* Q2 7,339 bopd, early August >17,000 bopd 3P reserves increased 53% to 51.9 mmbbls from 2006 to 2007, 20.6 mmbbls proved, 36.9 mmbbls 2P 87 development locations as per D&M 17 additional Petrominerales development locations Heavy Oil Exploration Contracts 1.6 million acre exploration land base (100% WI) Drilling eight exploration wells in 2008 Heavy oil potential 3 Heavy oil blocks million acres 15 prospects, drilling at least 3 exploration wells this dry season THAI TM technology licensing agreement * All reserves figures are working interest to Petrominerales before royalties as per DeGolyer & MacNaughton (D&M). Additional Locations D&M Locations Current Production Base 15

17 Whitesands Project Area Fort Hills Northern Lights AT In-situ project Kearl Lake Horizon P CA Muskeg River Josylyn Creek IPE Firebag Syncrude LIN Peace River Project Region S BA HA North Aurora Mining project Suncor Fort McMurray Surmont PI P OPTI/Nexen Meadow Creek Devon OO Long Lake WHITESANDS Jackfish Creek Cold Lake Athabasca Project Region Christina Lake WA UPIS Hangingstone ELIN MEG Glover Tucker Lake Kirby ACCE Peace River SS PI PELINE Peace River E Dawson E Lewis UTF Dover MacKay River Millenium Foster Creek Wolf Lake/Primrose Cold Lake Orion Cold Lake Project Region 62 section Whitesands oil sands leases (46,240 acres - 100%) 3P + contingent recoverable resource up to 804 mmbbls based on SAGD technology Glover lease (10 sections 6,400 acres 100%) Continue to delineate additional resource Whitesands THAI Project Integrated Injection & Production Facilities Air Toe Combustion Zone Mobile Oil Coke Zone Zone Cold Bitumen Heel 16

18 Whitesands Project Operating Since July 2006 Successes First three well pairs on air injection and production Sustaining high temperature combustion Wells exhibiting high productive capability Sustaining high oil cuts Consistent in-situ upgrading No air by-pass Achieving improved on-stream factors Drilled world s first CAPRI TM well (P3B) Challenges Manage sand production Manage well productivity Whitesands THAI Project Three-Well Expansion 125m 100m 17

19 CAPRI TM Liner CAPRI TM Liner Design 18

20 THAI Benefits Minimal natural gas and water use Higher recovery rates % of oil in place Improved economics Lower capital cost 1 horizontal well, no steam & water handling facilities Lower operating cost negligible natural gas & minimal water handling Higher netbacks for partially upgraded product Faster project execution time Lower environmental impact 50% less greenhouse gas emissions Net useable water production Partial upgraded oil requires less refining Smaller surface footprint THAI TM Oil Initial Upgrading BITUMEN THAI TM PARTIALLY UPGRADED OIL 19

21 THAI TM Upgraded Produced Oil June 2008 Sales Oil Quality Bitumen* Partially Upgraded Production Viscosity at 20 C, centipoise 555,000 1,550 Oil Sulfur content, wt % API Gravity SARA ANALYSIS Volatile organics, 40 C mass % Saturates Aromatics Resins Asphaltenes *revised analysis May River Project Advancing Commercial Development 100,000 bbl/day project with one central facility Phase-1, 10 to 15,000 bbl/day Phase-1 application target late Q Pre-build for a rolling development of additional phases 20

22 Dawson THAI Project Peace River Bluesky Heavy Oil CNRL Baytex Penn West Bluesky channel Dawson 50% interest THAI License agreement Drilling stratigraphic test well in Q3 Two well THAI project planned for 2008 Large mobile heavy oil resource 6 miles Sutton Creek Project Saskatchewan Oil Sands ` 23,040 acre license Athabasca oil sands resource potential Known resource applicable for THAI Shooting 45 km seismic program with stratigraphic drilling later in

23 Archon Technologies Developing an integrated THAI solution Acquired rights to Crystasulf technology for worldwide heavy oil production applications Energy self sufficiency Minimize greenhouse gas emissions Minimize SO2 emissions Reduce environmental footprint Usable produced water Enhanced upgrading Enhance intellectual property life of core THAI TM / CAPRI TM technologies through new patents International Potential THAI TM A Global Technology Fully develop existing Whitesands lands Acquire and/or execute additional joint ventures Licensing technology to third parties Targeting oil sands & conventional heavy oil globally 22

24 Three Strong Business Units Building Value Q ,517 boepd, early August > 17,500 boepd 3P reserves 65.8 mmboe Plan to drill 154 net Bakken locations in 2008 High-impact exploration Application of technology to large resource opportunities TSX:PMG, 76% owned Q ,339 bopd, early August > 17,000 bopd 3P reserves mmboe 1.6 million exploration acres Long-term heavy oil potential THAI TM /CAPRI TM - step change heavy oil technologies Up to 804 mmbbls recoverable (based on SAGD) Expanding Whitesands project 100,000 bopd May River commercial project Global potential TSX: PBG TSX: PMG 23