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Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited

Canadian Oil Sands Limited · Aug 15, 2012 · 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. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 1
    EnerCom?s The Oil & Gas Conference August 13-15, 2012
  2. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 2
    Why own COS? ? Pure 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 financial strength and…
  3. Enercoms The Oil and Gas 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 ? minimal exposure to reservoir performance,…
  4. Enercoms The Oil and Gas 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. Enercoms The Oil and Gas 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. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 6
    2012 Outlook1 $ millions unless otherwise indicated Sales volume (bbl/d) 110,400 WTI average (US$/bbl) 90.00 Average premium (discount) to WTI ($/bbl) (7.00) Operating expenses 1,514 ($ per bbl) 37.46 Sales2 3,393 Cash flo from…
  7. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 7
    Highly leveraged to increasing crude oil prices 5 00 6.00 Illustrative cash flow from operations ($/share) #REF! 2,3 1.00 2.00 3.00 4.00 5.00 2012 estimate 0.00 $70 $75 $80 $85 $90 $95 $100 $105 $110 All figures in Canadian…
  8. Enercoms The Oil and Gas 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 July 27/12 report Our production is 100% light,…
  9. Enercoms The Oil and Gas 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 $1,500 Free Cash Flow Dividends Cumulative Dividends…
  10. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 10
    Highest yield amongst peers 6.94%* 1.54% COS Canadian Natural 2.87% 1.12% 0.00% 0.78% 1.70% 3.03% Cenovus Imperial MEG Nexen Suncor S&P/TSX 2.07% 1.03% S&P 500 Average Bank of Canada Source: Bloomberg as at July…
  11. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 11
    Operating leverage Syncrude production Thousand barrels per day Average production 100 150 200 250 300 350 400 Average production (290,000 bbl/d, or 83% of design capacity since 2007) 0 50 2007 2008 2009 2010 2011 2012F…
  12. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 12
    Investing in our business for sustained success Major Capital Projects Total Costs 1 Total cost Estimate % Target in- estimate ($B) accuracy service date Mildred Lake mine train replacement 1.6 +15% / -15% Q4 2014 Aurora North mine…
  13. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 13
    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…
  14. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 14
    Strong liquidity position $ millions 2000 Cash requirements 500 1000 1500 Dividends Capital Expenditures Based on COS? 2012 Outlook dated July 27/12; dividends assume quarterly $0.35 per share for the remainder of 2012 0 Cash…
  15. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 15
    Managing a strong, efficient balance sheet Net debt, $ millions 2000 500 1000 1500 * As at June 30/12 0 2005 2006 2007 2008 2009 2010 2011 2012* Target Targeting net debt level of $1 to $2 billion
  16. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 16
    Positioned for strong free cash flow $ 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 * COS is estimating…
  17. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 17
    Pipeline solutions for pricing disparities Brent US$109/bbl Seaway Twinning 2014 KXL (Southern portion) Enbridge Line 9 Reversal Seaway Reversal 2012 WTI US$93/bbl SCO Cdn$90/bbl 2015 Enbridge Northern Gateway 2017+ Kinder…
  18. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 18
    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…
  19. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 19
    Compelling valuation relative to new mining projects Project(s) Cost estimate/ Enterprise value1 Production capacity (bbl/d) Product $ per flowing bbl Syncrude $10.0 billion 128,000 Light, sweet $78,000 (COS? share) synthetic…
  20. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 20
    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…
  21. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 21
    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 ?…
  22. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 22
    Senior notes issue ? 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 senior notes…
  23. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 23
    COS: a premier pure-play oil sands investment ? Ticker: COS on Toronto Stock Exchange ? Shares outstanding: 484.5 million ? 52 week high / low / close1: $26.34 / $18.17 / $20.18 ? Market Cap: $9.8 billion1 ? Enterprise value: $10.0…
  24. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 24
    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%…
  25. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 25
    Factors that affect dividend payout ? Strong balance sheet ? Higher capex anticipated in Supported by: Balanced by: Strong balance sheet ? Large operating base generating reliable cash flow ? Spending on Aurora South development…
  26. Enercoms The Oil and Gas 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. Enercoms The Oil and Gas 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. Enercoms The Oil and Gas 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. Enercoms The Oil and Gas 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. Enercoms The Oil and Gas 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. Enercoms The Oil and Gas 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. Enercoms The Oil and Gas 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. Enercoms The Oil and Gas 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. Enercoms The Oil and Gas 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. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 35
    Syncrude?s tailings management plan ? Three pronged approach: ? Centrifuge ? Spinning action separates out the water ? Consolidated tails ? Combining fine tails with gypsum and sand as the tailings are deposited, causing the…
  36. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 36
    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)…
  37. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 37
    2012 Crown Royalty Calculation Based on 2012 guidance provided July 27/12 SCO % Mining Bitumen Revenue1 3,393 2,333 Operating expenses (1,514) 76% (1,200)2 Non-production costs (132) 80% (105) Capital expenditures (1,048) 79% (828)…
  38. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 38
    2012 Guidance Document July 27, 2012 (All financial figures are in Canadian dollars unless noted otherwise) 2012 Production Outlook (Synthetic Crude Oil) Syncrude (gross) 1 106 - 112 290,000 - 306,000 Canadian Oil Sands (net) 2 39…
  39. Enercoms The Oil and Gas Conference – Canadian Oil Sands Limited – slide 39
    2012 Cash Flow From Operations Sensitivities 8 2012 Cash Flow From Operations Sensitivities 8 $ Millions I $/Share I $33 $0.07 $15 $0.03 $35 $0.07 $52 $0.11 $31 $0.06 $25 $0.05 2012 Capital Expenditures Major Projects…

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