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CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited

Canadian Oil Sands Limited · Feb 13, 2014 · 39 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. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 1
    Credit Suisse 19th Annual Energy Summit February 11-13, 2014 Ryan Kubik, President & CEO Scott Arnold, Director, Sustainability and External Relations
  2. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 2
    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…
  3. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 3
    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…
  4. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 4
    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…
  5. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 5
    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.…
  6. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 6
    Quality and location differentials Cdn /bbl Trailing 3-month average Trailing 3-Month Average 130 120 110 100 90 Brent SCO 80 WTI WCS 70 Bitumen 60 50 40
  7. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 7
    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
  8. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 8
    2014 Outlook 20141 Sales volume (bbl/d)2 105,700 Operating expenses (/bbl) 41.48 Cash flow from operations (millions)3,4 1,158 Cash flow from operations (/share)3 2.39 Realized selling price (/bbl) 87.77 1. 2014 Outlook…
  9. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 9
    Highly leveraged to increasing crude oil prices1 Illustrative cash flow from operations (/share)2 4.00 3.00 2014 estimate 2.00 1.00 0.00 WTI (US/bbl) 70 80 90 100 110 All figures in Canadian dollars unless otherwise…
  10. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 10
    Operating leverage Syncrude production Thousand barrels per day 400 350 Average production of 287,000 bbl/d since 2007 300 250 200 150 100 50 0 2007 2008 2009 2010 2011 2012 2013 2014F 2 million bbl change in 2014…
  11. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 11
    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…
  12. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 12
    Syncrude upgrader delivers significant value per bbl 120 Earnings before interest and taxes 5 100 Depreciation COS EBIT 80 32/bbl Crown royalties 60 3 Other 40 Operating expenses and G&A 20 0 1, 4 COS Mining & SAGD 1…
  13. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 13
    Compelling valuation relative to new mining projects Project(s) Cost estimate/ Production Product per flowing bbl Enterprise value1 capacity (bbl/d) Syncrude 10.4 billion 128,000 Light, sweet 81,000 (COS share) synthetic Kearl Lake 2…
  14. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 14
    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 (% ) 12/31/132 +15% / Mildred Lake mine…
  15. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 15
    Major projects spending profile billions Spent to 2014 2015 Dec. 31, 2013 Canadian Oil Sands share 1.3 0.8 0.2 Costs exclude regular maintenance (estimated to average about 0.4 billion COS share) and capitalized interest.…
  16. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 16
    Mildred Lake Mine Train Replacement
  17. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 17
    Strong liquidity position to support capital program and healthy dividend millions 2000 1.8B 1.5B 1500 1.2B Capex 1000 0.8B 500 Dividends 0 Cash uses - 2014 Cash flow from Cash balance Credit facility estimate operations…
  18. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 18
    Managing a strong, efficient balance sheet Net debt1, millions 2000 1500 1000 500 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 Targeting net debt level of 1 to 2 billion 1. Non-GAAP measure
  19. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 19
    Positioned for strong free cash flow1,2 millions, net to Canadian Oil Sands 2500 major projects capex 3 maintenance capex 2000 capitalized interest cash flow from operations 1500 1000 500 0 2007 2008 2009 2010 2011…
  20. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 20
    Dividends1 continue to reflect free cash flow2 over time millions Annual Total Dividends Cumulative Dividends/FCF 2,400 8,000 2,100 7,000 1,800 6,000 Dividends 1,500 5,000 1,200 4,000 Cumulative Dividends 900 3,000 600…
  21. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 21
    Highest yield amongst peers COS 7.04%* Canadian Natural 2.19% Cenovus 3.39% Imperial 1.15% MEG 0.00% Suncor 2.63% S&P/TSX 2.99% S&P 500 Average 2.01% Source: Bloomberg as at Feb. 4/14 *Based on price as at Feb. 3/14…
  22. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 22
    COS investment highlights Assuming continued oil price strength, expect free cash flow to expand in 2015 SCO receives attractive margins, reflecting quality premium to heavy products Major projects nearing completion Two…
  23. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 23
    COS has significantly outperformed the market over the long-term 10 Year Cumulative Return as of December 31, 2013 700% 600% 500% Average compound annual return 400% 300% Canadian Oil Sands 14% 200% S&P/TSX Oil & Gas 10% 100%…
  24. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 24
    Appendix
  25. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 25
    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)…
  26. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 26
    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 / 19.86 Market cap: 9.6 billion1 Enterprise value: 10.4 billion2…
  27. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 27
    Demonstrating strong return on shareholders equity Canadian Oil Sands' ROE 45% 45.00 40% 40.00 35% 35.00 Percentage Return 30% 30.00 Return on Equity 25% 25.00 Average ROE of 24% 20% 20.00 15% 15.00 Average Share…
  28. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 28
    Bitumen production projects 2 mine train moves 2 new mine train builds 2 sustaining mine train builds
  29. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 29
    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…
  30. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 30
    A mine train processes oil sands ore 1 Crusher 2 Surge bin 3 Mix box 4 Hydrotransport 2 1 3 4
  31. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 31
    Access to Markets Pipeline Expansions in Development Source: CAPP
  32. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 32
    U.S. Oil Demand and Sources of Supply Source: IEA Annual Energy Outlook 2012
  33. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 33
    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…
  34. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 34
    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…
  35. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 35
    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
  36. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 36
    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…
  37. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 37
    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…
  38. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 38
    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…
  39. CREDIT SUISSE ENERGY SUMMIT – Canadian Oil Sands Limited – slide 39
    2014 Crown Royalty Calculation Based on 2014 Outlook provided Jan. 30/14 SCO % Mining Bitumen Revenue1 3,386 2,469 Operating expenses (1,600) 80% (1,280) Non-production costs (181) 80% (145) Capital expenditures (1,014) 85% (862)…

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