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Investor Day – Pengrowth Energy Corp

Pengrowth Energy Corp · Jan 21, 2016 · 67 slides

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Slides

  1. Investor Day – Pengrowth Energy Corp – slide 1
    SURVIVE TO THRIVE 2016 INVESTOR DAY PRESENTATION January 21, 2016 2016 INVESTOR DAY 1
  2. Investor Day – Pengrowth Energy Corp – slide 2
    2016 INVESTOR DAY AGENDA Introduction & Welcome Wassem Khalil Manager Investor Relations Financial Overview Chris Webster Chief Financial Officer Corporate Overview Derek Evans President & CEO Senior Vice President Steve De…
  3. Investor Day – Pengrowth Energy Corp – slide 3
    FINANCIAL OVERVIEW 2016 INVESTOR DAY 3
  4. Investor Day – Pengrowth Energy Corp – slide 4
    PLANNING FOR LOW PRICES 2016 CAPITAL BUDGET ASSUMPTIONS AND ACTIONS Suspended the dividend Price assumptions used in capital budget Assumptions WTI crude oil (US /bbl) 30.00 AECO natural gas (Cdn /Mcf) 2.40 Foreign exchange…
  5. Investor Day – Pengrowth Energy Corp – slide 5
    2016 CORPORATE GUIDANCE PRESERVING FINANCIAL HEALTH IN A LOW PRICE ENVIRONMENT Metric Guidance* Production breakout Capital Budget (million) 60 to 70 Light oil (bbl/d) 12,500 Average daily production (boe/d) 59,000 to 61,000 Heavy…
  6. Investor Day – Pengrowth Energy Corp – slide 6
    MANAGING WITHIN DEBT COVENANTS DEBT IS MANAGEABLE AND EXPECTED TO REMAIN BELOW COVENANT LIMITS 5.0 4.5 Value of unrealized F/X hedge book as at January 19, 2016: 149 million 4.0 Bank and Noteholder Covenant limits Senior…
  7. Investor Day – Pengrowth Energy Corp – slide 7
    OTHER DEBT COVENANTS WE DO NOT FORECAST TRIGGERING ANY OF OUR DEBT COVENANTS With low oil and gas prices expected in 2016: Will Pengrowth trigger a debt covenant Covenant YE 2015 YE 2016E Senior Debt to EBITDA 3.5x 2.8x 3.4x Total Debt…
  8. Investor Day – Pengrowth Energy Corp – slide 8
    SHORT-TERM STRATEGY SURVIVE TO THRIVE Focusing on the things we 1 can control 2 Harvesting hedge book 3 Asset dispositions 4 Cost reductions 5 Prudent capital spending 2016 INVESTOR DAY 8
  9. Investor Day – Pengrowth Energy Corp – slide 9
    FOCUSING ON THE THINGS WE CAN CONTROL WHAT ARE WE GOING TO DO TO ENSURE WE SURVIVE TO THRIVE Targeting debt reduction with free cash flow, monetizing a portion of FX hedges and proceeds from asset sales Significant hedge book (679…
  10. Investor Day – Pengrowth Energy Corp – slide 10
    RISK MANAGEMENT PROGRAM ENSURING EXCESS FUNDS FLOW AFTER CAPITAL PROGRAM AND DIVIDENDS Hedge positions as at December 31, 2015 Crude Oil1 Natural Gas Volume Percentage Average Price Volume Percentage Average Price Hedged2 Hedged2…
  11. Investor Day – Pengrowth Energy Corp – slide 11
    PROTECTING CASH FLOWS REALIZED MONTHLY HEDGING GAINS/LOSSES FROM RISK MANAGEMENT ACTIVITIES 120 321 million of hedging gains 100 80 60 Million 40 20 0 -20 -40 -60 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2015 2016…
  12. Investor Day – Pengrowth Energy Corp – slide 12
    HEDGES ENSURE STABLE FUNDS FLOW DESPITE SIGNIFICANT DECLINES IN COMMODITY PRICES Quarterly Funds Flow Change in US WTI Oil Price Change in AECO 140 0% Funds flow from operations ( million) 120 -10% 100 % change in…
  13. Investor Day – Pengrowth Energy Corp – slide 13
    DISPOSITION PROGRAM TO DATE, WE HAVE MADE SIGNIFICANT PROGRESS ON OUR 600 MILLION ASSET DISPOSITION GOAL ( million ) Q1 2015 Dispositions 3.0 Q2 2015 Dispositions 28.4 Q3 2015 Dispositions 2.7 Q4 2015 Dispositions 229.0 Total 2015…
  14. Investor Day – Pengrowth Energy Corp – slide 14
    MANAGING OUR COST STRUCTURE 2015/2016 YEAR OVER YEAR SAVINGS IN OPEX AND G&A 23 million 25 million Operating Costs Fuel savings, reduced service 30 percent reduction in head costs office staffing levels G&A Costs…
  15. Investor Day – Pengrowth Energy Corp – slide 15
    2016 CAPITAL PROGRAM PRUDENT CAPITAL SPENDING 2016 Capital Comments ( million) Thermal 14.0 Expansion phase engineering/design 47.0 Integrity, maintenance and subsurface Conventional repair Corporate 4.0 Land, seismic and IT Total…
  16. Investor Day – Pengrowth Energy Corp – slide 16
    BALANCE SHEET MANAGEMENT LONG-TERM DEBT STRUCTURE Convertible Debentures Credit Facilities 7% 6% (Cdn million) YE 2015 YE 2016E Credit Facilities/Bank line 107 0 Senior Notes 1,614 1,519 Convertible Debentures 137 137 Total…
  17. Investor Day – Pengrowth Energy Corp – slide 17
    BALANCE SHEET MANAGEMENT COMMITTED BANK FACILITY No debt maturities in 2016 1.0 billion committed credit facility is unsecured and covenant based Senior debt/EBITDA of 3.5x Total debt/EBITDA of 4.0x Senior debt/book capitalization…
  18. Investor Day – Pengrowth Energy Corp – slide 18
    BALANCE SHEET MANAGEMENT LONG-TERM DEBT MATURITIES ARE MANAGEABLE ( million) No maturities in 2016 Convertible Debentures Long-term Notes () Expected to generate approximately 137 Long-term Notes (Cdn) Long-term Notes (US) 355…
  19. Investor Day – Pengrowth Energy Corp – slide 19
    2017 DEBT STRATEGY PLANS FOR HANDLING MATURING DEBT AVAILABLE OPTIONS TO RETIRE TERM NOTES AND CONVERTIBLE DEBT Term Notes Convertible Debentures Least costly Repay with cash on hand Repay with cash on hand Long-term costs…
  20. Investor Day – Pengrowth Energy Corp – slide 20
    2016 FINANCIAL HIGHLIGHTS SURVIVE TO THRIVE No debt maturities requiring new capital Hedging providing cash flow protection through end of year Excess cash flow will be used to reduce debt Disposition proceeds will further…
  21. Investor Day – Pengrowth Energy Corp – slide 21
    CORPORATE OVERVIEW 2016 INVESTOR DAY 21
  22. Investor Day – Pengrowth Energy Corp – slide 22
    RESPONDING TO LOW COMMODITY PRICES WHAT WE SAID WE WOULD DO A significantly reduced capital program for 2015 of 200 million, representing a 78 percent reduction from 2014 Adjustment in dividend policy to a new level of 0.01/share…
  23. Investor Day – Pengrowth Energy Corp – slide 23
    RESPONDING TO LOW COMMODITY PRICES WHAT WE DID A significantly reduced capital program for 2015 of 200 million, representing a 78 percent reduction from 2014 (Capital reduced from 904 to 190 million YOY) Adjustment in dividend…
  24. Investor Day – Pengrowth Energy Corp – slide 24
    2015 OBJECTIVES DELIVERING ON OUR PROMISES Original Actual Guidance Result Production (boe/d) 70,000 to 72,000 71,409 Capital Budget ( million) 190 to 2101 186 Operating Costs (/boe) 15.50 to 16.50 14.28 Cash G&A Expenses (/boe)…
  25. Investor Day – Pengrowth Energy Corp – slide 25
    CONTINUING ACTIONS IN 2016 FOCUSED ON REDUCING OUTSTANDING DEBT AND STRENGTHENING BALANCE SHEET Suspension of the dividend 2016 capital program of 60 to 70 million Corporate hedge book with market value of approximately 6791…
  26. Investor Day – Pengrowth Energy Corp – slide 26
    PENGROWTHS RESOURCE BASE PORTFOLIO WITH INCREASING FOCUS ON OIL AND LIQUIDS DEVELOPMENT 2016 INVESTOR DAY 26
  27. Investor Day – Pengrowth Energy Corp – slide 27
    LONG-TERM DEVELOPMENT OVER 10 BILLION OF DEVELOPMENT OPPORTUNITIES Large accumulations Long life assets CONVENTIONAL ASSETS Low declines THERMAL Low cost structure ASSETS Swan Hills Low sustaining capital Cardium Lindbergh…
  28. Investor Day – Pengrowth Energy Corp – slide 28
    LONG-TERM DEVELOPMENT OVER 10 BILLION OF DEVELOPMENT OPPORTUNITIES Thermal oil Montney gas Lindbergh Groundbirch/Bernadet 6.7 billion 4.2 billion GROWTH VEHICLES 2016 INVESTOR DAY 28
  29. Investor Day – Pengrowth Energy Corp – slide 29
    LONG-TERM STRATEGY THRIVE TO GROW Focus on long-life, low cost and 1 competitively advantaged assets Continue with disciplined capital 2 investment strategy Significant long-term development and resource 3 opportunities Balance…
  30. Investor Day – Pengrowth Energy Corp – slide 30
    OPERATIONS OVERVIEW 2016 INVESTOR DAY 30
  31. Investor Day – Pengrowth Energy Corp – slide 31
    LINDBERGH THERMAL OIL 6.7 BILLION OF LONG-TERM REINVESTMENT OPPORTUNITIES 243 MMbbls 15,100 bbl/d 2P reserves1 Current production2 Large high quality resource 6.7 billion of future capital reinvestment potential (2P 3.7…
  32. Investor Day – Pengrowth Energy Corp – slide 32
    GLOBAL RESOURCE COSTS LINDBERGH COMPETES WITH LOWEST COST PRODUCTION ON WORLD COST CURVE 120 Average break even 100 Oil Extra heavy oil Sands Ultra Deepwater 80 Onshore rest of world Deepwater Onshore 72 Cost (US per…
  33. Investor Day – Pengrowth Energy Corp – slide 33
    SUSTAINING CAPITAL LOW DECLINE RATES COUPLED WITH LOW SUSTAINING CAPITAL ALLOW FOR PRODUCTION GROWTH EVEN IN LOW PRICE ENVIRONMENT 25.00 20.00 Sustaining Capital (/bbl) 15.00 10.00 5.00 0.00 Source: BMO…
  34. Investor Day – Pengrowth Energy Corp – slide 34
    LINDBERGH CHARACTERISTICS TOP TIER SAGD OPERATION 9o 11o API oil, 50,000 to 350,000 cP Clean continuous sands with no significant shales Reservoir characterized as nearshore marine sand Laterally extensive high quality cap rock…
  35. Investor Day – Pengrowth Energy Corp – slide 35
    LINDBERGH THERMAL SAGD PROVIDING TOP QUARTILE ECONOMICS WITHIN SAGD SPACE 30% Break even NPV10 = 0 US 45.79 WTI 70 25% Cash flow =0 US 29.43 WTI 60 20% Cash Netback (Cdn/bbl) 50 15% 10% 40 IRR (%) 5% 30 0% 20…
  36. Investor Day – Pengrowth Energy Corp – slide 36
    LINDBERGH OPERATING NETBACKS PROVIDING STRONG NETBACKS TO SUPPORT CASH FLOWS Three Months Ended September 30, 2015 June 30, 2015 WTI (US/bbl) 46.43 57.94 WCS (/bbl) 43.86 57.00 WCS differential 28.2% 20.3% Diluent (/bbl) 54.46…
  37. Investor Day – Pengrowth Energy Corp – slide 37
    LINDBERGH COMMERCIAL PRODUCTION PHASE ONE PRODUCTION CONTINUES TO GROW 18,000 14.0 16,000 12.0 14,000 2016 Average Annual Production Instantaneous Steam-Oil Ratio (ISOR) 16,500 bbl/d Commenced steaming 10.0 Bitumen…
  38. Investor Day – Pengrowth Energy Corp – slide 38
    LINDBERGH COMMERCIAL PHASE PRODUCTION NORMALIZED AVERAGE PER METER PRODUCTION TRENDING WITH PILOT PERFORMANCE 1.2 30 ESP Conversions 28 1.1 25 1.0 23 0.8 Oil Rate per Screen Meter ((bbl/d)/m) 20 Pad D02 0.7 5 WPs…
  39. Investor Day – Pengrowth Energy Corp – slide 39
    LINDBERGH PILOT PERFORMANCE PILOT WELL PAIR RESULTS POINT TO HIGHER RECOVERY RATES VERSUS TYPE CURVE 1,400 Type Curve Lindbergh Actual* 1,200 1,000 Bitumen Production (bbl/d) 800 600 Type Curve based on 1.2 million…
  40. Investor Day – Pengrowth Energy Corp – slide 40
    LINDBERGH COMMERCIAL RESULTS RESULTS DEMONSTRATE TOP QUARTILE RESULTS IN PRODUCTIVITY AND SORS 2,000 1,800 1,600 Average well productivity (bbl/d) 1,400 1,200 Christina Lake (CVE) Firebag 1,000 800 Jackfish 1…
  41. Investor Day – Pengrowth Energy Corp – slide 41
    LINDBERGH DEVELOPMENT 2016 LINDBERGH DEVELOPMENT PLANS 2016 average Facilities are 14 million CAPITAL SPENDING production WATER RECYCLING currently Maintenance and expected to be recycling in enhancement 16,500 bbl/d excess…
  42. Investor Day – Pengrowth Energy Corp – slide 42
    LINDBERGH DEVELOPMENT STATUS OF EXPANSION PHASE Status of Phase Two Phase Two Phase Two modified application Development Plan plan EIA portion of application Incremental 17,500 bbl/d Investigating alternative Deemed Complete by…
  43. Investor Day – Pengrowth Energy Corp – slide 43
    LINDBERGH DEVELOPMENT WHAT IS REQUIRED BEFORE WE MOVE FORWARD WITH ANY FORM OF EXPANSION Oil sands royalty clarity Greenhouse gas/carbon policy clarity Continued reduction in capital costs Stability in WTI crude oil prices…
  44. Investor Day – Pengrowth Energy Corp – slide 44
    MONTNEY GAS SIGNIFICANT DEVELOPMENT INVENTORY 8.0 Tcf 2,500 boe/d Petroleum Current production2 initially-in-place (PIIP)1 Large high quality resource 4.2 billion of future capital reinvestment potential Groundbirch (2P 210…
  45. Investor Day – Pengrowth Energy Corp – slide 45
    NORTH AMERICAN NATURAL GAS PLAYS MONTNEY SUPPLY COSTS AMONG THE BEST IN NORTH AMERICAN GAS PLAYS 5.00 7.17 North American Natural Gas Plays Supply Costs 8.27 4.50 4.00 3.50 Representative of 3.00 Bernadet and Groundbirch…
  46. Investor Day – Pengrowth Energy Corp – slide 46
    MONTNEY DEVELOPMENT ADVANCES IN TECHNOLOGY IMPROVING PLAY ECONOMICS Fracturing intensity continues to rise with both fracturing stages per well and proppant per stage continuing to grow 25 250,000 Number of stages/well 20…
  47. Investor Day – Pengrowth Energy Corp – slide 47
    MONTNEY PRODUCTIVE CAPACITY AVERAGE PER-WELL PRODUCTIVITY CONTINUES TO INCREASE Source: RBC Capital Markets Montney Evolution Playing the Long Game October 2015 2016 INVESTOR DAY 47
  48. Investor Day – Pengrowth Energy Corp – slide 48
    PENGROWTH MONTNEY OVERVIEW SIGNIFICANT DEVELOPMENT INVENTORY Montney land holdings in excess of 50 net sections Groundbirch (dry gas) Bernadet (liquids-rich) Pengrowths best estimate for total petroleum initially-in-place (PIIP)…
  49. Investor Day – Pengrowth Energy Corp – slide 49
    PENGROWTH MONTNEY OVERVIEW MULTIPLE PLAYS WITHY LONG-TERM GROWTH POTENTIAL Bernadet Groundbirch 32.6 sections (100 percent working 21 gross sections (90 percent working interest) interest) Expected to provide a scalable, low risk…
  50. Investor Day – Pengrowth Energy Corp – slide 50
    MONTNEY PLAY ECONOMICS PROVIDE STRONG RETURNS THAT COMPETE WITH OIL PLAYS Bernadet1 Groundbirch1 Per Well Unrisked Per Well Unrisked Metrics Case 1 Case 2 Case 3 Metrics Case 1 Case 2 Case 3 DCET ( million/well) 5.5 5.5 5.5 DCET (…
  51. Investor Day – Pengrowth Energy Corp – slide 51
    GROUNDBIRCH MONTNEY WELL PERFORMANCE WELLS DRILLED IN 2014 OUTPERFORMING FIRST GENERATION WELLS 1000.0 Initial 2014 900.0 IP 30 Rate (MMcf/d) 1.7 5.4 800.0 EUR (Bcf) 6.0 8.0 DCET ( million/well) 7.4 5.5 700.0 Frac Stages 8-10…
  52. Investor Day – Pengrowth Energy Corp – slide 52
    BERNADET DEVELOPMENT GOALS LONG-TERM GROWTH OPPORTUNITY WITH SIGNIFICANT INVENTORY Single Zone Potential Development Map Bernadet development goals 180 Potential Locations/zone Lower costs in a drilling manufacturing process Minimize…
  53. Investor Day – Pengrowth Energy Corp – slide 53
    MONTNEY MARKET ACCESS TRANSPORTATION ACCESS/OPTIONALITY TO SUPPORT GROWTH Future flexibility to access multiple markets for the gas production: TCPL (AECO and beyond) Spectra (Station 2, Sumas and AECO) Alliance (Chicago) assumes a…
  54. Investor Day – Pengrowth Energy Corp – slide 54
    MONTNEY DEVELOPMENT TIMELINE KEY ITEMS IN 2016 FOR PRE-DEVELOPMENT Groundbirch No activity in 2016 Increased take away capacity expected in 2018 Bernadet Stakeholder consultations Water strategy assessment and development…
  55. Investor Day – Pengrowth Energy Corp – slide 55
    OLDS/GARRINGTON MULTI-TIER LIQUIDS DEVELOPMENT OPPORTUNITIES 75.3 MMboe 17,400 boe/d 2P reserves 1 Current production2 Large, contiguous land base with access to multi-tier development opportunities Over 500 net (unrisked)…
  56. Investor Day – Pengrowth Energy Corp – slide 56
    OLDS/GARRINGTION DOMINANT POSITION WITH OPPORTUNITIES FOR GROWTH Pengrowth has been one of the RED DEER most active players in the area SYLVAN LAKE Focus has been on Cardium development INNISFAIL Over 500 gross sections of…
  57. Investor Day – Pengrowth Energy Corp – slide 57
    OLDS/GARRINGTION DEVELOPMENT DOMINANT POSITION WITH OPPORTUNITIES FOR GROWTH Light oil (35o to 50o oil) Control of key Technology continues and liquids-rich natural INFRASTRUCTURE processing ( 112 to unlock large new gas with…
  58. Investor Day – Pengrowth Energy Corp – slide 58
    OLDS/GARRINGTION LIGHT OIL AND LIQUIDS-RICH GAS IN STACKED RESERVOIRS Horizontal potential in all layers Technology continues to unlock new resource plays Stacked reservoirs (Cardium, Viking, Mannville, Elkton, Pekisko and Wabamun)…
  59. Investor Day – Pengrowth Energy Corp – slide 59
    CARDIUM ECONOMICS CARDIUM FOCUS PROVIDES QUICK PAYOUT AND STRONG NETBACKS 40 WTI & 50 WTI & 60 WTI & GLJ Jan 1, 2.00 AECO 2.50 AECO 3.00 AECO 2016 Garrington Cardium NPV 10% ( million) -751 -3 727 553 ROR (%) 0% 10% 23% 17%…
  60. Investor Day – Pengrowth Energy Corp – slide 60
    GARRINGTON CARDIUM ECONOMICS WELLS HAVE OUTPERFORMED THE INDUSTRY AVERAGE RESULTS CURVE 250 Pengrowth has a superior land position Typical Unrisked 100% Well Completions have outperformed peer group 200 30 day initial production…
  61. Investor Day – Pengrowth Energy Corp – slide 61
    LOCHEND CARDIUM ECONOMICS LOCHEND CARDIUM WELLS ON TRACK WITH TYPE CURVE 300 Typical Unrisked 100% Well 30 day initial production (boe/d) 278 250 First year average production (boe/d) 152 Reserves* (Mboe) 194 200 Production…
  62. Investor Day – Pengrowth Energy Corp – slide 62
    OLDS GAS PLANT OPERATED PLANT PROVIDES STRATEGIC AND OPERATING ADVANTAGES A Critical Midstream Asset Olds Gas Plant - Monthly Sales Volumes Lonepine acquisition online (4.4 MMcf/d) 50 Pengrowth 6-15 upgrade start-up Tenure…
  63. Investor Day – Pengrowth Energy Corp – slide 63
    OLDS/GARRINGTON DEVELOPMENT OLDS/GARRINGTON 2016 PLAN Continue to build mid-stream volumes that enhance operating costs as well as improve efficiencies Keep up to date on competitor activity in the area 2016 INVESTOR DAY 63
  64. Investor Day – Pengrowth Energy Corp – slide 64
    SWAN HILLS LOW DECLINE, STRONG CASH FLOW LIGHT OIL OPPORTUNITY 74.9 Mboe 13,000 boe/d 2P reserves1 Current production2 World class conventional and unconventional asset Cash flow generating engine Limited development capital…
  65. Investor Day – Pengrowth Energy Corp – slide 65
    SWAN HILLS LOW DECLINE PRODUCTION PROVIDES FREE CASH FLOW Devil 100% WI 230 net sections of land with operated supporting House Mountain infrastructure House Mountain Unit No.2 Unit No.1 19.3% WI 7.1% WI Over 4 billion…
  66. Investor Day – Pengrowth Energy Corp – slide 66
    CONVENTIONAL OPERATIONS KEY TAKEAWAYS FOR 2016 AND BEYOND Safe and efficient operations with a plan for delivery of budgeted results 2016 capital spending focused on safety, integrity and asset reliability Leverage our operated…
  67. Investor Day – Pengrowth Energy Corp – slide 67
    SURVIVE TO THRIVE EXECUTING ON WHAT IS IN OUR CONTROL We have a plan to survive and thrive Focusing on preserving and improving financial strength Targeting debt reduction through free cash flow and proceeds from asset sales…

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