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BAML Global Energy Conference – Canadian Oil Sands Limited

Canadian Oil Sands Limited · Nov 14, 2012 · 38 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. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 1
    Bank of America Merrill Lynch Global Energy Conference Miami Nov. 13 ? 14, 2012
  2. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 2
    Why own COS? ? Pure (100% light, sweet) crude oil investment in long-life resource ? Strong existing operating base with production upside potential ? High-quality, undeveloped leases for future development ? Well-positioned with…
  3. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 3
    Syncrude: A high quality resource ? Strong, stable production base ? Integrated oil sands mining project ? Proven technology ? Predictable reservoir recovery ? over 90% ? Lower risk compared to SAGD projects ? Minimal exposure to…
  4. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 4
    Syncrude supported by Management Services Agreement with ExxonMobil and Imperial Oil JV ownership structure Canadian Oil Sands (COS) 25% Suncor 36.74% 12% 7.23% 5% Imperial Oil Sinopec Nexen Murphy Oil Mocal XOM/IMO…
  5. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 5
    6 Significant reserves and resources support growing production for decades Billions of Synthetic Crude Oil Barrels 5 4 3 2 1 0 Produced to date Proved plus probable reserves Contingent resources Prospective resources All…
  6. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 6
    2012 Outlook1 $ millions unless otherwise indicated Sales volume (bbl/d) 107,400 WTI average (US$/bbl) 95.00 Average premium (discount) to WTI ($/bbl) (1.00) Operating expenses 1,485 ($ per bbl)3 37.77 Sales2 3,698 Cash flo from w…
  7. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 7
    Highly leveraged to increasing crude oil prices 6.00 #REF! Illustrative cash flow from operations ($/share)2,3 1.00 2.00 3.00 4.00 5.00 2012 estimate 0.00 $75 $85 $95 $105 $115 WTI (US$) All figures in Canadian dollars unless…
  8. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 8
    Pure play oil sands investment 0% 20% 40% 60% 80% 100% COS Oil sands as % of total production COS Canadian Natural Cenovus Imperial MEG Nexen Suncor Source: FirstEnergy Capital Oct. 15/12 report Our production is 100% light,…
  9. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 9
    Dividends continue to reflect free cash flow over time $1,800 $6,000 $ millions Annual Cumulative $ $1,000 $2,000 $3,000 $4,000 $5,000 $ $300 $600 $900 $1,200 $1,500 Free Cash Flow Dividends Cumulative Dividends…
  10. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 10
    Highest yield amongst peers 6.76%* 1.42% COS Canadian Natural 2.61% 1.05% 0.00% 0.84% 1.54% 2.96% Cenovus Imperial MEG Nexen Suncor S&P/TSX 2.17% 1.03% S&P 500 Average Bank of Canada Source: Bloomberg as at Nov. 7/12…
  11. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 11
    Operating leverage Syncrude production Thousand barrels per day Average production 100 150 200 250 300 350 400 Average production (290,000 bbl/d, or 83% of design capacity since 2007) 0 50 2007 2008 2009 2010 2011 2012F…
  12. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 12
    Premium product and competitive operating costs result in significant margin advantage Realized price advantage vs. Competitor ?A? Operating cost advantage $14.00 / disadvantage vs $16.00 $18.00 Syncrude margin advantage over…
  13. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 13
    Investing in our business for sustained success Total cost Major Capital Projects Total Costs 1 estimate ($B) Estimated % accuracy % complete @ 09/30/12 Target in service date Mildred Lake mine train replacement 1.6 +15% / -15%…
  14. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 14
    Major projects spending profile Spent to 2012 2013 2014 2015 $ billions Spent to Dec. 31, 2011 2012 2013 2014 2015 Canadian Oil Sands? share $0.4 $0.7 $0.9 $0.8 $0.2 Costs exclude regular maintenance (estimated to average about…
  15. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 15
    Strong liquidity position $ millions 1500 2000 500 1000 1500 Dividends Capital Expenditures (1) Based on COS? 2012 Outlook dated Oct. 29/12. 0 Cash flow from operations - 2012 guidance Cash uses Cash balance @Sept. 30/12…
  16. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 16
    Managing a strong, efficient balance sheet Net debt1, $ millions 2000 500 1000 1500 1. Non-GAAP measure. 2 Expected year-end net debt based on Oct. 29/12 Outlook. 0 2005 2006 2007 2008 2009 2010 2011 2012 Target Targeting net…
  17. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 17
    Positioned for strong free cash flow1 $ millions, net to Canadian Oil Sands maintenance major projects cash flow from operations 800 1200 1600 2000 0 400 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (1) Free cash flow…
  18. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 18
    Pipeline solutions for pricing disparities Brent US$109/bbl Seaway Twinning 2014 KXL (Southern portion) Enbridge Line 9 Reversal Seaway Reversal 2012 WTI US$92/bbl SCO Cdn$90/bbl 2015 Enbridge Northern Gateway 2017+ Kinder…
  19. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 19
    Market access Keystone XL (KXL) Routing Hardisty to Houston/P.A. Size 700-830 kbd Cushing to Gulf Coast 700-830 kbd Enbridge Line 9 Reversal Routing Sarnia to Montreal Size 100?250 kbd Timing 2013 Timing 2015 Enbridge…
  20. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 20
    Compelling valuation relative to new mining projects Project(s) Cost estimate/ Enterprise value1 Production capacity (bbl/d) Product $ per flowing bbl Syncrude $10.2 billion 128,000 Light, sweet $80,000 (COS? share) synthetic…
  21. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 21
    Return compared to energy producers 2011 total shareholder returns 10 year total shareholder returns ARC CNRL Husky COS Enerplus PennWest CNRL Suncor Nexen ARC COS Husky PennWest Enerplus Suncor Nexen Capital appreciation…
  22. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 22
    Final thoughts ? 40+ year reserve life, decades more ? Pure crude oil investment Strength in Syncrude Strength in COS ? Fully upgraded, light sweet oil ? Track record of delivering free cash flow to investors over the long-term ?…
  23. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 23
    COS: a premier pure-play oil sands investment ? Ticker: COS on Toronto Stock Exchange ? Shares outstanding: 484.6 million ? 52 week high / low / close1: $25.19 / $18.21 / $20.72 ? Market Cap: $10.0 billion1 ? Enterprise value: $10.3…
  24. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 24
    Senior notes issued in 2012 ? US $700 million ? US $400 million at 4.5% due April 1, 2022 ? US $300 million at 6.0% due April 1, 2042 ? Ratings: Moody?s - Baa2 (Stable) and S&P - BBB (Stable) ? Expected to result in outstanding…
  25. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 25
    Demonstrating strong return on shareholders? equity 45% $45 Percentage Return $5 $10 $15 $20 $25 $30 $35 $40 5% 10% 15% 20% 25% 30% 35% 40% Return on Equity Average ROE of 25% Average Share Price Average ROE of 25%…
  26. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 26
    COS most levered to WTI oil prices 30% 2012 cash flow per share sensitivity to WTI oil prices -10% 0% 10% 20% -30% -20% COS MEG PXX IMO SU CNQ NXY HSE TLM CVE ECA WTI - $10/bbl WTI + $10/bbl Source: TD Securities
  27. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 27
    Bitumen production projects 2 mine train moves 2 new mine train builds 2 sustaining mine train builds
  28. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 28
    A mine train processes bitumen 1 Crusher Surge bin Mix box Hydrotransport 2 3 4 2 1 3 4
  29. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 29
    Mildred Lake mine train replacements ? Constructing 2 new Ore Processing Plants ? New mine trains will have larger capacity than existing mine trains ? New wet crushing technology to enhance recovery and reduce maintenance ? No…
  30. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 30
    Aurora North mine train relocations ? Much smaller scope than Mildred Lake mine train construction ? 2 existing mine trains will be relocated ? No production impact expected (3 trains at Aurora North provides flexibility during move…
  31. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 31
    Strong lease position for future development ? Undeveloped Aurora South leases have similar ore quality and stripping ratio to producing leases ? Current plan is to begin investing in development capex late this decade ? Bitumen…
  32. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 32
    A responsible developer of the oil sands Achievements at Syncrude 9 Reduced water intensity by 60% since the early 1980s 9 Recycle ~87% of water used 9 Reduced energy use per barrel by 39% since 1982, thereby reducing CO2 emissions 9…
  33. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 33
    Syncrude CO2 emissions vs other sources of crude oil Full-life cycle, well-to-wheels, including combustion Kg CO2e emitted for every bbl of crude oil produced (extraction, processing, distribution and combustion) 100 200 300 400…
  34. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 34
    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…
  35. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 35
    Syncrude Crown royalty terms* ? Greater of 25% net bitumen revenue less capital and operating costs, or 1% of gross bitumen revenue* All figures gross to Syncrude ? Previously based on Synthetic Crude Oil (upgraded from bitumen)…
  36. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 36
    2012 Crown Royalty Calculation Based on 2012 guidance provided Oct. 29/12 SCO % Mining Bitumen Revenue1 3,733 2,612 Operating expenses (1,485) 82% (1,218)2 Non-production costs (123) 70% (86) Capital expenditures (1,026) 85% (872)…
  37. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 37
    2012 Cash Flow From Operations Sensitivities 8 $ Milli I $/Sh I $ Millions I $/Share I $32 $0.07 $15 $0.03 $33 $0.07 $57 $0.12 $30 $0.06 $23 $0.05 2012 Capital Expenditures Major Projects ($millions) Syncrude COS Share Syncrude…
  38. BAML Global Energy Conference – Canadian Oil Sands Limited – slide 38
    2012 Cash Flow From Operations Sensitivities 8 $ Milli I $/Sh I Syncrude Production (million bbls)1 Canadian Oil Sands Sales (million bbls)1 Canadian Oil Sands Sales (thousand bbls/d)1 Sales Weighted Average WTI Crude Oil (US$/bbl)…

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