Strategic Review Process Penn Wests Long-Term Plan Strongly Supported Target oil production CAGR(2) 12.6% Target funds flow CAGR(2) 18.7% Cardium, Viking, Slave Point Focus on highest return projects Non-core Asset Focusing…
What Will Not Change Penn West Values Our commitment to the safety of our employees and contractors Our commitment to protecting our environment Be a people place where high performance matters and potential is realized Have…
Changing to Become Canadas Leading Conventional Liquids Producer Target debt to funds flow ratio of 1.0 1.5x(1)(3) Target 1.5 2.0B in asset Expected annual sustainability ratio of 110%(1)(3) sales by 2015 Capital program on average…
Delivering Change, Driving Performance Moving Forward, Expect Gains to Increase in Pace Actions already taken since June: Completed Board strategic review process & developed long-term plan Organization streamlined, cost savings to…
Long-Term Plan Overview Repositioning Penn West For Success Prioritized light oil development target increasing liquids weighting to 80% by 2018 Target total production CAGR(1) of 7.3%; oil production CAGR(1) of 12.6% Cardium is…
Change Leading to Real Growth In The Plan Period Funds Flow Netback(1)(2) Oil production grows at a 12.6% CAGR(3) target 45 Netback(2) grows at a 10.6% CAGR (3) target 40 Translates into a 14.5% funds flow per debt 35 /boe…
Focus on the Balance Sheet Reset and Maintain Discipline Plan anticipates 485MM of dispositions closing by end of 2013 and up to a further 1.5B by end of 2014 - Potential that all or part of incremental 1.5B could close in 2014 Future…
Focus on the Balance Sheet Add Stability; Reduce Risk Key financial covenant in both credit facility and private notes is 3.0x senior debt / EBITDA - No debt to capitalization covenant concerns expected through 2018 Post…
Focus on the Balance Sheet Solid Debt Capital Structure Post 2B in anticipated dispositions, total debt would be reduced to and managed at target of 1.5 1.7B Assumes bank debt capacity is used to repay notes as they become due -…
Focus on the Balance Sheet Debt Maturity Profile Balanced and Manageable Penn West has a well balanced note maturity profile with amounts due reflecting only a small portion of anticipated funds flow in the respective years Although…
Focus the Portfolio: A&D Strategy Timing Target Proceeds Initial non-core asset disposition Phase 1 - Debt repayment End 2013 - Focusing asset base 1.5 to 2.0B Major portfolio repositioning and focus - Debt repayment Phase 2…
Focus the Portfolio: A&D Strategy Early Success with Phase 1 Non-core; Phase 2 Assets Attractive Phase 1: Expected proceeds of 485MM from non-core asset sales producing 12,500 boe/d (61% oil & liquids) executed Purchase & Sale…
Focus the Portfolio: A&D Strategy Non-core Area Divestment Targets Phase 1: Big Hill Current non-core deals Switchgrass 485MM, 12,500 boe/d Phase 2: 2014 - Cordova - Peace River Oil Partnership - Duvernay Big - Select…
Operated Development Capital Quality Assets + Disciplined Investment Program = Value Added Growth Total operated development capital target of 4.7B over five years Cardium is the key development play with 2.5B invested during the plan…
Inventory & Internal Rates of Return Solid Full Cycle Economic Return Programs with Multi-Year Running Room Significant inventory remains beyond long-term plan Expect incremental inventory from future appraisal at Slave Point,…
Improve Capital Efficiency Focused on Value Added Reserve Metrics Development Replacement Ratio(1)(2) Operated Development Cost(3) 250% 20 Reserves Replacement Ratio 200% 18 150% 16 /boe 100% 14 50% 12 0% 10…
Long-Term Plan Summary Long-Term Plan Robust, Positioned for a Decade of Solid Results Programs are high quality as evidenced by robust metrics - Target 0.7 times PIR, 35% IRR…
2014 Capital Budget Focused on Core Oil Resources & Balanced Across All Quarters 2014 Capital Allocation (MM) Corp / Other Focus of 2014 capital budget is on maximizing 47 Infrastructure / profitability and capital efficiency Major…
Assets Overview
Cardium Development Profile Gaining Momentum in Canadas Largest Light Oil Resource Operated Development Net Production Adds & Capital(1) Gross Well Count(1) Cumulative Development Production 800 45 350 40 300 35 600…
Cardium Trend Long-Term Development Plan Cardium Capital Program (1) T50 800 Willesden Green Pembina 600 MM/year J Lease 400 Pembina 200 0 2014 2015 2016 2017 2018 Cardium Production(1) 60,000 Lodgepole…
Cardium Key Attributes(1)(2)(3) Strategic Value & Potential(1)(2)(3) 600,000 net acres Working Interest (%) 65 650 MMboe contingent resource Total PIIP (MMboe) 5,748 Dominant infrastructure position Total Contingent Resources…
Viking Development Profile WCSB Leading Economic Returns Prioritized Operated Development Net Production Adds & Capital(1) Gross Well Count(1) Cumulative Development Production 160 10 120 140 9 8 100 120 Well…
Viking Oil Long-Term Development Plan Viking Tier 1 Type Curve 100 Industry Leader in Core Areas(1) R23 R20W3 80 2013 (27 wells) 60 boe/d Penn West Dodsland 40 Tier 1 Type Curve P10 20 P50 P90 0 0 12 24 T32…
Viking Key Attributes(1)(2)(3) 2014 Play Focus & Status(1)(2)(3) Working Interest (%) 92 Industry leader for production results Achieved competitive costs in early Q4 2013 Total Contingent Resources (MMboe) 171 Implement Avon Hills…
Slave Point Development Profile Extensive Light Oil Upside Potential Operated Development Net Production Adds & Capital(1) Gross Well Count(1) 450 16 80 Cumulative Development Production 400 14 70 350 60 12 Well…
Slave Point Long-Term Development Plan Slave Point Capital Program (1) 450 400 Red Earth 350 Sawn Sawn R10W5 R7 300 Otter MM/year 250 200 Penn West land 150 100 PW 3D seismic 50 PW 2013 well 0 PW 2014 well 2014…
Slave Point Key Attributes(1)(2)(3) 2014 Play Focus and Status(1)(2)(3) Low-Risk development drilling Working Interest (%) 95 - Otter 7 wells Total PIIP (MMboe) 2,065 - Sawn 9 wells Total Contingent Resources (MMboe) 114 - Red…
Improve Costs & Netbacks: Operating Costs Growing the Business in Cost Advantaged / Competitive Areas Company Labour 1.68 New Development Production Other Corporate Unit 3.88 1.12 Lease Rentals 2013(1) 2018(1) Operating…
Improve Costs & Netbacks: G&A Costs Fit for Purpose Support Solutions for the Business Net G&A Costs / Production(1)(2) Top G&A Cost Drivers 160,000 190 Other 150,000 170 Net G&A Costs (MM) Production (boe/d) 140,000 10%…
Oil Growth, Cost Control Lead to Improving Netbacks & Funds Flow Growth 60 50 2018E before Hedging (/boe) Q2 2013 Field Netback 2017E Continued improvement in costs per barrel 2016E 40 2015E 2014E Field netback…
Penn Wests Long-Term Plan Delivers Value Added Liquids Growth & Financial Performance Annual Average Production(2) Funds Flow(1)(2)(3) 150 2,000 125 7.3% CAGR(4) 1,500 18.7% CAGR(4) mboe/d Total Boe MM 100 1,000…
Supplemental Information
Long-Term Plan Pricing Assumptions Maintain the 0.14 quarterly dividend through the plan period Conservative Canadian light oil price assumption of an average of 89/bbl No cash taxes in plan period See Forward-Looking Information…
Long-Term Plan Target Statistics Target Four Year CAGR (%) Target Five Year CAGR (%) 2015 2018(1) 2014 2018(1) Total Production boe/d 7.3 2.0 boe/share 6.3 1.1 boe/share (debt adjusted)(3) 4.8 4.0 Oil Production bbls/d 12.6 8.4…
Funds Flow & Sustainability WTI Sensitivity Penn Wests internal price deck is consistent with Canadian Bank average Funds Flow(1)(2) Sustainability Ratio(1)(2) 2,000 140% Internal deck Internal deck Canadian Bank average…
Contingent Resources Major Light Oil Plays Best Estimate of Resources(1)(2) (mboe) Resource Class Cardium(3) Slave Point Viking Waskada Cumulative Production(4) 865,059 30,123 124,166 17,648 Proved plus Probable Reserves(4)…
Definitions and Industry Terms All references to dollar amounts in this presentation are to Canadian dollars unless otherwise specified. A&D means oil and natural gas property acquisitions and divestitures. Boe / share and Boe / share…
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