Bank of America Merrill Lynch 2013 Global Energy Conference November 21-22, 2013 Marcel Coutu President & CEO
Why own COS Pure (100% light, sweet) crude oil investment in long-life resource Strong operating base with production upside potential High-quality, undeveloped leases for future development Well-positioned with financial strength…
Syncrude: A high quality resource Strong, stable production base Integrated oil sands mining project No exposure to light/heavy differentials Proven technology Predictable reservoir recovery over 90% Less exposure to natural…
Large reserve and resource base supports decades of production Billions of Synthetic Crude Oil Barrels 6 5 4 3 2 1 0 Produced to date Proved plus probable Contingent resources Prospective resources reserves All amounts…
Pure play oil sands investment Oil sands as % of total production 0% 20% 40% 60% 80% 100% COS Canadian Natural Cenovus Imperial MEG Suncor Our production is 100% light, sweet crude oil Source: FirstEnergy Capital Nov.…
Markets for COS Syncrude Production Kitimat Syncrude Edmonton Burnaby Hardisty Quebec City Montreal Sarnia Chicago Patoka Cushing Current synthetic crude oil markets Houston Potential new markets
Highly leveraged to increasing crude oil prices Illustrative cash flow from operations (/share)2 4.00 3.00 2013 estimate 2.00 1.00 0.00 WTI 70 80 90 100 110 (CDN/bbl) All figures in Canadian dollars unless otherwise noted.…
Operating leverage Syncrude production Thousand barrels per day 400 350 Average production of 290,000 bbl/d since 2007 300 250 200 150 100 50 0 2007 2008 2009 2010 2011 2012 2013F 2 million bbl change in 2013…
Premium product and competitive operating costs result in significant margin advantage 20.00 Syncrude margin advantage over nearest competitor Realized price advantage vs. Competitor A 15.00 Operating cost advantage / disadvantage…
Syncrude upgrader delivers significant value per bbl 120 Earnings before interest and taxes 5 100 Depreciation COS EBIT 80 36/bbl Crown royalties 60 Other 3 40 Operating expenses and 20 G&A 0 1, 2 COS1, 4 Mining & Typical…
Compelling valuation relative to new mining projects Project(s) Cost estimate/ Production Product per flowing bbl Enterprise value1 capacity (bbl/d) Syncrude 10.7 billion 128,000 Light, sweet 81,000 (COS share) synthetic Kearl Lake 2…
Investing in our business for sustained success Total cost Total cost Estimated % Major Capital Projects Total Costs 1 estimate Target in- estimate complete (B) service date accuracy (% ) 09/30/132 +15% / Mildred Lake mine…
Major projects spending profile billions Spent to 2013 2014 2015 TOTAL Dec. 31, 2012 Canadian Oil Sands share 1.0 0.9 0.9 0.2 3.0 Costs exclude regular maintenance (estimated to average about 0.4 billion COS share) and…
Mildred Lake Mine Train Replacement
Strong liquidity position to support capital program and healthy dividend millions 2500 2.3B Debt Repayment 2000 1.5B 1500 Capex 1.3B 1000 0.8B 500 Dividends 0 Cash uses - 2013 Cash flow from Cash balance Credit facility…
Managing a strong, efficient balance sheet Net debt1, millions 2000 Short-term Debt 1500 Cash 1000 Target Long-term Debt 500 0 2005 2006 2007 2008 2009 2010 2011 2012 2015 Targeting net debt level of 1 to 2 billion 1.…
Positioned for strong free cash flow1 millions, net to Canadian Oil Sands maintenance capital major projects capital cash flow from operations 2000 1600 1200 800 400 0 2 2007 2008 2009 2010 2011 2012 2013 2014 2015…
Dividends continue to reflect free cash flow2 over time millions Annual Total Dividends Cumulative Dividends/FCF 2,100 7,000 1,800 6,000 1,500 5,000 Dividends 1,200 4,000 900 3,000 Cumulative Dividends 600 2,000 300…
Highest yield amongst peers COS 6.81%* Canadian Natural 1.50% Cenovus 3.10% Imperial 1.14% MEG 0.00% Suncor 2.08% S&P/TSX 2.96% S&P 500 Average 2.00% Source: Bloomberg as at Oct.31/13 *Based on price as at Oct. 30/13…
COS investment highlights Expect free cash flow to expand after 2014 SCO receives attractive margins, reflecting quality premium to heavy products Major projects are progressing on schedule and on budget Solid finance plan to…
COS has significantly outperformed the market over the long-term 10 Year Cumulative Return as of September 30, 2013 800% 700% 600% Average compound 500% annual return 400% Canadian Oil Sands 16% 300% 200% S&P/TSX Oil & Gas…
Appendix
COS: a premier pure-play oil sands investment Ticker: COS on Toronto Stock Exchange Shares outstanding: 484.6 million 52 week high / low / close1: 21.93 / 18.62 / 20.56 Market cap: 10 billion1 Enterprise value: 10.7 billion2…
Demonstrating strong return on shareholders equity Canadian Oil Sands' ROE 45% 45.00 40% 40.00 35% 35.00 30% 30.00 Return on Equity Percentage Return 25% 25.00 Average ROE of 24% 20% 20.00 15% 15.00 Average Share Price…
Syncrude supported by Management Services Agreement with ExxonMobil and Imperial Oil JV ownership structure Canadian Oil Sands (COS) Imperial Oil 36.74% 25% Suncor 12% 5% 7.23% Murphy Oil Sinopec Mocal Nexen (CNOOC)…
Bitumen production projects 2 mine train moves 2 new mine train builds 2 sustaining mine train builds
Mildred Lake Mine Extension (MLX) Project Expected to be a highly economic means to access a large bitumen source Limited scope should result in a significantly lower cost than a new mine Leverages current operating and…
Access to Markets Pipeline Expansions in Development Source: CAPP
U.S. Oil Demand and Sources of Supply Source: IEA Annual Energy Outlook 2012
Syncrude is a leader in sustainable oil sands development Recognition Leading Research and Development Syncrude operates the industrys only dedicated R&D centre Syncrude spends 60 million on R&D each year; one of Top 50 spenders in…
A responsible developer of the oil sands Achievements at Syncrude Reduced water intensity by 60% since the early 1980s Recycle 85% of water used Responsible for 70% of all reclaimed land in oil sands mining industry Returned 3,400…
Oil sands industry GHG emissions are 3.5% of those of the U.S. coal industry Source: U.S. DOE/EIA, Environment Canada 2009, CAPP
Wells-to-wheels CO2 emissions Average oil sands is only 9% more GHG intensive than average U.S. barrel Source: IHS CERA Special Report Oil Sands Dialogue: Oil Sands, Greenhouse Gases, and US Oil Supply: Getting the Numbers…
Environmental regulations GHG Provincial regulations require 12% reduction in emission intensity over 2003 - 2005 average for large emitters If not met, the emitter may: Pay 15/tonne levy into Climate Change and Emissions Management…
Syncrude Crown royalty terms* All figures gross to Syncrude Greater of 25% net bitumen revenue less capital and operating costs, or 1% of gross bitumen revenue* Previously based on Synthetic Crude Oil (upgraded from bitumen) revenues…
2013 Crown Royalty Calculation Based on 2013 Outlook provided Oct. 30/13 SCO % Mining Bitumen Revenue1 3,603 2,965 Operating expenses (1,504) 85% (1,278) Non-production costs (154) 85% (131) Capital expenditures (1,188) 92%…
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