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RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited

Canadian Oil Sands Limited · Jun 8, 2012 · 40 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. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 1
    RBC Capital Markets Global Energy and Power Conference June 4, 2012 Ryan Kubik Chief Financial Officer Canadian Oil Sands Limited
  2. RBC Capital Markets Global Energy and Power 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. RBC Capital Markets Global Energy and Power 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. RBC Capital Markets Global Energy and Power 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. RBC Capital Markets Global Energy and Power 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. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 6
    2012 Outlook1 $ millions unless otherwise indicated Sales volume (bbl/d) 2 110,400 WTI average (US$/bbl) 100.00 Average premium (discount) to WTI ($/bbl) (10.00) Operating expenses 1,529 ($ per bbl) 37.83 Sales 3 3,637 Cash flo…
  7. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 7
    Investing in our business for sustained success Total cost Estimate % Target in Major Capital Projects Total Costs 1 estimate ($B) accuracy service date Mildred Lake mine train replacement 1.6 +15% / -15% Q4 2014 Aurora North mine…
  8. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 8
    Major projects spending profile1 Spent to 2012 2 2013 2014 $ billions Spent to Dec. 31, 2011 2012 2013 2014 Syncrude $0.9 $2.1 $2.1 $1.3 Canadian Oil Sands? share $0.4 $0.8 $0.8 $0.5 (1) Costs exclude regular maintenance ($0 9…
  9. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 9
    A mine train processes bitumen 1 Crusher Surge bin Mix box Hydrotransport 2 3 4 2 1 3 4
  10. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 10
    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…
  11. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 11
    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…
  12. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 12
    Strong liquidity position 3.5 $ billions 1.5 2.0 2.5 3.0 Undrawn operating facilities Cash balance t Dividends Cash requirements 0.0 0.5 1.0 Liquidity 2012 investment and finance requirements 2012 cash sources at…
  13. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 13
    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 Data for 2009 and…
  14. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 14
    Increasing capacity utilization 400 Syncrude production Thousand barrels per day Average production of 290 000 bbl/d 50 100 150 200 250 300 350 290,000 bbl/d, or 83% of design capacity over 2007 to 2011 0 2007 2008 2009…
  15. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 15
    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…
  16. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 16
    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…
  17. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 17
    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…
  18. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 18
    Pipeline solutions for pricing disparities Brent $118/bbl Seaway Twinning 2014 WTI $103/bbl Seaway Twinning KXL (Southern portion) Enbridge Line 9 Reversal Seaway Reversal 2012 $103/bbl SCO $97/bbl 2015 Enbridge Northern…
  19. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 19
    Highly leveraged to increasing crude oil prices 5.00 6.00 Illustrative cash flow from operations ($/share) 1.64 2,3 0.00 1.00 2.00 3.00 4.00 5.00 2012 estimate 0.00 $75 $80 $85 $90 $95 $100 $105 $110 $115 $120 All figures in…
  20. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 20
    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 May 8/12 report Our production is 100% light,…
  21. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 21
    Compelling valuation relative to new mining projects Project(s) Cost estimate/ Enterprise value1 Production capacity (bbl/d) Product $ per flowing bbl Syncrude $11.8 billion 128,000 Light, sweet $83,000 (COS? share) synthetic…
  22. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 22
    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…
  23. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 23
    Highest yield amongst peers 6.45%* 1.21% COS Canadian Natural 2.50% 1.04% 0.00% 1.14% 1.50% 2.93% Cenovus Imperial MEG Nexen Suncor S&P/TSX 2.02% 1.03% S&P 500 Average Bank of Canada Source: Bloomberg as at May 9/12…
  24. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 24
    Final thoughts ? 40+ year reserve life, decades more ? Pure crude oil investment Strength in Syncrude Strength in COS ? Fully upgraded, light sweet crude oil ? Track record of delivering free cash flow to investors over the…
  25. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 25
    Return compared to energy producers 2011 total shareholder returns 10 year total shareholder returns ARC CNQ Husky COS Enerplus PennWest Canadian Natural Suncor Nexen ARC COS Husky PennWest Enerplus Suncor Nexen Capital…
  26. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 26
    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 net debt of $1.5 billion,…
  27. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 27
    COS: a premier pure-play oil sands investment ? Ticker: COS on Toronto Stock Exchange ? Shares outstanding: 484.5 million ? 52 week high / low / close1: $32.33 / $18.17 / $21.53 ? Market Cap: $10.5 billion1 ? Enterprise value: $10.6…
  28. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 28
    price differentials to WTI $US/bbl 140.00 WTI SCO Bitumen 20 00 40.00 60.00 80.00 100.00 120.00 Sources: CAPP, NGX and Alberta Government BVM 0.00 20.00 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 SCO has traded close…
  29. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 29
    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 Return on average…
  30. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 30
    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…
  31. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 31
    Competitive valuation 0.0 15.0 30.0 COS P/CF 1 % of P + P Oilsands Reserves2 COS Canadian Natural Cenovus Imperial MEG 100% 67% 73% 97% 100% Nexen Suncor 1. Non-GAAP measure; based on May 10/12 closing trading price…
  32. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 32
    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
  33. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 33
    Bitumen production projects 2 mine train moves 2 new mine train builds 2 sustaining mine train builds
  34. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 34
    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…
  35. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 35
    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…
  36. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 36
    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…
  37. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 37
    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)…
  38. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 38
    2012 Crown Royalty Calculation Based on 2012 guidance provided April 30/12 SCO % Mining Bitumen Revenue1 3,639 2,800 Operating expenses (1,529) 80% (1,223) Non-production costs (136) 80% (109) Capital expenditures (1,143) 76% (869)…
  39. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 39
    2012 Guidance Document April 30, 2012 (All financial figures are in Canadian dollars unless noted otherwise) 2012 Production Outlook (Synthetic Crude Oil) Syncrude (gross) 1 106 - 114 290,000 - 311,000 Canadian Oil Sands (net) 2…
  40. RBC Capital Markets Global Energy and Power Conference – Canadian Oil Sands Limited – slide 40
    2012 Cash Flow From Operations Sensitivities 8 $ Millions I $/Share I $33 $0 07 S d ti d (Cd $1 00/bbl) $33 $0.07 $15 $0.03 $34 $0.07 $54 $0.11 $33 $0.07 $25 $0.05 2012 Capital Expenditures Major Projects ($millions) Syncrude…

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