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MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc

Perpetual Energy Inc · May 21, 2014 · 61 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 1
    Perpetual Annual General Meeting May 21, 2014
  2. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 2
    Perpetual Energy Inc. DIVERSIFIED RESOURCE STYLE GROWTH ORIENTED Conventional ENTREPRENEURIAL Shallow Gas EXPLORER, PRODUCER & MARKETER Distributing Trust BUILT TO GROW BUILT TO PROSPER BUILT TO LAST 3
  3. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 3
    70% 62% OF RESERVE VALUE 59% OF REVENUE 52% OF RESERVES OF PRODUCTION
  4. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 4
    Perpetual Energy TSX:PMT Common shares outstanding 148.9 million Management ownership 25.6% Share price(1) 1.67 Trading volume(2) 432,000 shares/day Market capitalization 249 million Net debt 394 million Net bank debt(3) 84 million…
  5. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 5
    Operating profile Conventional Shallow Gas Mannville Heavy Oil Eastern Alberta Bitumen Warwick Gas Storage Viking/Colorado Shallow Shale Gas Edson Wilrich Deep Basin Multi-Zone Liquids-Rich Gas Tight Oil and Gas Exploration…
  6. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 6
    Diversified portfolio Built to prosper SHALLOW GAS LIQUIDS-RICH HEAVY OIL BITUMEN OTHER GAS Eastern Edson Wilrich Mannville Panny Warwick Gas Alberta Greater Edson Mannville Bluesky Storage Conventional Multi-zone EOR Liege GOB…
  7. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 7
    Portfolio management strategy PROVEN MEDIUM AND CASH FLOW DIVERSIFYING LONG TERM GENERATORS GROWTH STRATEGIES VALUE STRATEGIES Maximize cash flow Invest for growth Optimize and Advance Conventional shallow gas Eastern Alberta…
  8. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 8
    Commodity diversification Oil and NGL Production Revenue from Oil and NGL 120 50% 4,500 25% 45% 2014 Forecast Revenue 4,000 100 Warwick 40% Gas Storage 20% Percentage of total production (%) 3,500 Oil and NGL Production…
  9. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 9
    Asset base transformation 100% 12,000 90% Resource-style growth assets 10,000 80% 43% of production in 2013 growing to 52% in 2014 Growth Asset Production (boe/d) 70% 8,000 Production (% of total) 60% 50% Absolute…
  10. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 10
    2014 Top five strategic priorities 1. Reduce Debt and Manage Downside Risk 2. Grow Edson Liquids-Rich Gas Production, Reserves, Cash Flow, Inventory and Value 3. Maximize Value of Mannville Heavy Oil 4. Maximize Cash Flow from…
  11. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 11
    1. Key priority Reduce debt and manage downside risk 12
  12. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 12
    Balance sheet Net Bank Debt: 84 million (March 31, 2014) Borrowing base on credit facility 130 million Next semi-annual redetermination October 2014 Senior Unsecured Notes: 150 million Coupon rate - 8.75% Maturity date - March 2018…
  13. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 13
    Debt Reduction 2012: 23 Transactions Closed 2012 Total Net Proceeds: 167 million 2013: 4 Transactions Closed 2013 Net Asset Sale Proceeds: 79 million Production 16 Boe/d P+P Reserves 13.1 MMBoe Reduction in FDC 123 million…
  14. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 14
    Diversification Warwick Gas Storage 40 Bcf Storage Reservoir Commercial Park and Loan Delta Pressure to 47 Bcf business 10 Bcf base reserves cushion gas in place 30 to 50 year life Up to 25 Bcf potential working Grass Roots…
  15. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 15
    Commodity price risk management strategy Enhance or protect funds flow and balance sheet Enhance or protect the economics of an acquisition Enhance or protect capital program economics Capitalize on perceived market anomalies 200…
  16. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 16
    Commodity price risk management sensitivities Downside risk to funds flow mitigated with significant 2014 hedges in place Average of 55% of natural gas hedged Average of 65% of oil hedged Exposed to gas price risks and rewards in…
  17. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 17
    2. Key Priority Grow Edson liquids-rich gas production, reserves, cash flow, inventory and value 18
  18. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 18
    Edson Wilrich liquids-rich gas To Rosevear Plant (15% WI) Sales Pipeline to Alliance Constructed in 2013 Pipeline To Edson Deep Cut Plant 1-34 Gas Plant 16-10 Compressor Expanding to 60 MMcf/d Capacity 30 MMcf/d Edson Type…
  19. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 19
    Wilrich value potential West Edson Projected Economics per Drilling Location Capital (D,C & T) 6.4 MM gross NPV 10 % 10.7 MM BT gross ROR 168% BT F&D 6.83/boe Capital Efficiency 8,300 boe/d (first 12 months) Payout 0.8…
  20. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 20
    Wilrich value potential Edson Projected Economics per Drilling Location Capital (D,C & T) 5.1 MM NPV 10 % 3.3 MM ROR 47% BT F&D 11.30/boe Capital Efficiency 13,850 boe/d (first twelve months) Payout 1.9 Years Recycle Ratio…
  21. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 21
    Greater Edson liquids-rich gas play performance 7,000 8,000 80 160 40% production growth 7,000 expected in 2014 6,000 70 140 Driven by West Edson capacity expansion in 2014 Cumulative Production (MBoe) Cumulative Cash…
  22. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 22
    3. Key Priority Maximize value of Mannville heavy oil 23
  23. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 23
    Eastern Alberta Conventional heavy oil Discovered 14 Mannville pools 8 Lloyd, 5 Sparky, 1 Basal Quartz 200 MMbbl Original Oil in Place 10 MMbbl 5% recovery factor Current Production 3,100 bbl/d Low cost HZ development 1.1 MM…
  24. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 24
    Upper Mannville A pool Lloyd Channel OOIP = 30.5 MMbbl Cumulative production to date 1.0 MMbbl ( 3% RF) Booked Reserves (year end 2013) 1.4 MMbbl (7% RF) 24 wells drilled to date 4 additional multi-laterals in inventory 100m…
  25. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 25
    Mannville heavy oil value potential Projected Economics Per Well Assumptions Lloyd Sparky (McDaniel Year End 2013) Capital (D,C & T) 1.2 MM 1.2 MM 68.90/bbl Wellhead heavy price 2014 Pricing WTI US95/bbl, WCS US23.5/bbl, offset…
  26. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 26
    Waterflood and enhanced oil recovery Working Interest 66.7% Mannville I2I OOIP: 53 MMbbl Waterflood Pilot Pool Cum Prodn + McDaniel P+P: 1.7 MMbbl (3.1% recovery) 17 Horizontals to date (100 m spacing) Sparky Mid Type Log 3…
  27. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 27
    Waterflood and enhanced oil recovery scope Select Pools OOIP Cumulative P+P Implied Expected Potential with production Reserves Recovery Primary Secondary to YE 2013 booked at Factor Recovery Recovery and EOR YE 2013 (5-8%…
  28. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 28
    Mannville heavy oil play performance 60 180 50 Transitioning from Cumulative Capital 130 growth to Capital (MM) 40 (MM) 30 80 sustaining 20 30 production in 2014 10 Drilling capital reduced 0 -20 2009 2010…
  29. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 29
    4. Key Priority Maximize cash flow from shallow gas 30
  30. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 30
    Conventional shallow gas East Central and Northeast Alberta Cretaceous and Devonian sweet shallow gas Belly River Current production: 60 - 65 MMcf/d Base declines < 15% Viking Multiple stacked zones and play types Extensive…
  31. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 31
    5. Key Priority Advance and broaden portfolio of high impact opportunities with risk-managed investment Viking/Colorado Shallow Shale Gas Bitumen Exploration 32
  32. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 32
    Viking/Colorado shallow shale gas Belly River Play Fairway Viking Cardium/ Colorado Wells Booked Reserves Perpetual Lands 12 Bcf PNP booked in recompletions Viking Proved Undeveloped Historical 2P reserves of 100+ Bcf Viking…
  33. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 33
    Colorado technical advancement Colorado group free gas in place Total Resource in Place 130 Tcf OGIP estimated to average 16 Bcf/section Proven recovery from Cardium equivalent Potential in up to 6 zones within 290m shale group…
  34. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 34
    Bitumen 527net sections (329,000 net acres) of oil sand leases Variousformation targets and ultimate recovery methods 7potential project areas with varying potential Over 3 Billion bbls OBIP independently recognized at Liege…
  35. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 35
    Bitumen Panny Bluesky Low rate cold flow without 8 m Bitumen 10 m Bitumen solvent or thermal assistance Average pay thickness 11 m Low viscosity bitumen 15,000 cp 25oC 50,000 cp at 11oC reservoir temp Highly mobile at 70oC…
  36. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 36
    LEAD process technology pilot Low pressure electro-thermally assisted drive Pilot planned for 2015 Approvals pending 18.2 million expected capital and operating costs over pilot life (3 years) IETP funding (30%) 5.5 million Modelled…
  37. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 37
    Bitumen Liege carbonates AOC Shell Excellent reservoir quality vuggy porosity in Grosmont 3 Grosmont carbonate / Leduc OV wells drilled Combined with legacy gas wells to evaluate and map resource Stacking of 3 Grosmont…
  38. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 38
    2014 Capital Budget
  39. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 39
    2014 Capital spending Total Capital: 80 million Plan to spend within funds flow Q1 2014 Q2-Q4 2014 Total Wells Capital Wells Capital Wells Capital West Central Deep 3 gross 7 10 19 MM 26 MM 45 MM Basin (2.0 net) (3.5 net) (5.5…
  40. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 40
    Investment Thesis
  41. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 41
    Strong annual growth forecast 2013 Oil and NGL production growth of 12% Mannville oil production growth of 41% Deep basin production growth of 21% Funds flow and funds flow per share growth of 19% 2014 Key diversifying plays…
  42. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 42
    Future growth and value creation 2016 - 2020 Edson expansion for additional inventory development West and/or East Edson additional downspacing LIQUIDS-RICH Development of secondary targets including Belly River, Cardium, Second…
  43. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 43
    Future production growth potential Illustrative Production Inventory captured and risk assessment on track for future production growth 44 Growth trajectory depends on commodity prices, capital and play performance
  44. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 44
    Sum of the parts NAV Per Share 1,250 8.50 Unrisked NAV 7.19/Share Undeveloped Land 1,000 6.80 Bitumen Mannville PI Risked NAV 4.91 /Share 750 5.10 Viking/Colorado PI Conventional Shallow Gas PI NPV 8% ( millions) Reserve…
  45. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 45
    PMT investment thesis Asset base repositioning for resource-style & diversification successful Mannville heavy oil delivering results with material secondary recovery growth potential Edson Wilrich liquids-rich gas inventory proven and…
  46. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 46
    FOR ADDITIONAL INFORMATION Additional Susan L. Riddell Rose Information President & CEO Cameron R. Sebastian Vice President, Finance & CFO 3200, 605 5 Avenue SW Calgary, Alberta Canada T2P 3H5 800.811.5522 TOLL FREE 403.269.4400 PHONE…
  47. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 47
    Appendix 2013 Annual Results
  48. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 48
    2013 Top 5 strategic priorities 1. Maximize value of Mannville heavy oil 2. Position for growth of Edson liquids-rich gas 3. Manage downside risk 4. Advance and broaden portfolio of high impact opportunities with risk managed…
  49. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 49
    2013 Top strategic priorities 1. Maximize Value of Mannville Heavy Oil 13 Mannville oil pools discovered by year end 2013 (7 Lloyd; 5 Sparky; 1 Basal Quartz) Drilled 37 horizontal wells (35.7 net) for 49 million Increased heavy oil…
  50. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 50
    2013 Top strategic priorities 2. Position for Growth of Edson Liquids-Rich Gas Drilled 5 (2.5 net) horizontal wells Increased gas and NGL production 12% to 4,894 boe/d (29.4 MMcfe/d) Reserve additions of 13.64 MMboe offsetting…
  51. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 51
    2013 Top strategic priorities 3. Advance and Broaden Portfolio of High Impact Opportunities with Risk-Managed Investment Elmworth Sold for 77.5 MM to Crystallize Value Drilled and completed vertical well to continue majority of South…
  52. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 52
    2013 Top strategic priorities 4. Manage Downside Risk and Reduce Debt Decrease Costs Operating costs down 5% from 2012 (2013 - 75.4 MM) Interest expense decreased 11% from 2012 (2013 - 28.9 MM) G&A down 10% from 2012 (2013 - 24.5…
  53. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 53
    2013 Top strategic priorities 5. Prepare to Maximize Value from Shallow Gas in Gas Price Recovery Operating Costs Shallow gas op costs reduced 7.4MM (12.9%) from 2012 Suspended shut-in wells and pipelines and removed unused onsite…
  54. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 54
    Full year capital spending Total Capital: 96.7 Total 2013 Wells Capital Mannville Heavy Oil 37 (35.7 net) 49 MM (1) West Central Deep Basin 6 (3.0 net) 35 MM Land, Seismic, ARO & Other 12 MM Total 96 MM 1)…
  55. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 55
    Production highlights Oil& NGL production 412 bbl/d to 3,860 bbl/d, a 12% from 2012 levels Mannville heavy oil grew 24% Change in processing at Edson reduced NGL Natural gas production 11% to 88.9 MMcf/d due to shallow gas declines…
  56. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 56
    Funds flow Change Year Ended December 31 from 2012 Oil & Gas Price 32.0 MM % ( Millions) 2013 2012 Change Oil & NGL Production 9.7 MM Revenue 210.9 206.5 2 Hedging Gains 24.3 MM GOB Royalty 8.9 6.9 29 Gas Production 10.2 MM…
  57. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 57
    Balance sheet reconciliation Year Ended December 31 ( Millions) 2013 2012 % Change Exploration & Development 96.7 79.7 21 Acquisitions, net of Dispositions (51.6) (164.5) (67) Total Capital Expenditures 45.1 (84.8) (153) Funds…
  58. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 58
    Reserve distribution PNP/PUD 2PNP/2PUD 2PDP Total Reserves = 62.4 MMbbl Mannville Heavy Oil PDP Deep Basin PDP Eastern Shallow Gas 2PNP/2PUD 2PDP PNP/PUD 2PDP PDP - Proved Developed Producing PDP 2PNP/2PUD…
  59. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 59
    Reserve value distribution PNP/PUD Total NPV 10 = 622 million 2PNP/2PUD Mannville Heavy Oil 2PDP Deep Basin PDP PDP Eastern Shallow Gas 2PDP 2PNP/2PUD PNP/PUD 2PNP/2PUD PDP PDP - Proved Developed Producing…
  60. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 60
    Gas price risk management Volumes Fixed Price Futures Price(1) % of 2014 Type of Contract Term (GJ/d) (/GJ) (/GJ) Natural Gas Production(2) AECO Fixed Price May 2014 64,839 4.04 4.49 52% Financial AECO Fixed Price June 2014…
  61. MAY 2014 ANNUAL GENERAL MEETING – Perpetual Energy Inc – slide 61
    Oil price risk management Fixed or Floor Ceiling Price Futures % of 2014 Type of Volumes Term Price (/GJ) Price(1) Oil & NGL Contract (bbl/d) (/bbl) (/bbl) (/bbl) Production(2) WTI collars May Dec 2014 1,500 US 86.67 US 95.15 US…

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