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August 2016 Corporate Presentation – Birchcliff Energy Ltd.

Birchcliff Energy Ltd. · Aug 15, 2016 · 66 slides

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Slides

  1. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 1
    CORPORATE PRESENTATION August 2016
  2. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 2
    PEOPLE, FOCUS & EXECUTION 3
  3. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 3
    2016 Guidance & Select Pro-forma Information Birchcliff Post-Acquisition and Financings Current production as at August 9, 2016 65,000 boe/d Estimated 2016 Q4 average production 62,000 63,000 boe/d % oil and NGL 21% Estimated 2016 Q3…
  4. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 4
    INVESTMENT HIGHLIGHTS Current production is approximately 65,000 boe/d as at August 9, 2016 Q2 2016(1) average production was 39,513 boe/d, a 3% increase from 38,489 boe/d in Q2 2015 Q2 2016(1) cash flow was 13.3 million or 0.09 per…
  5. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 5
    INVESTMENT HIGHLIGHTS Focused assets in the Peace River Arch Area of Alberta (the Montney/Doig Natural Gas Resource Play and the Charlie Lake Light Oil Resource Play) Essentially 100% working interest; 99% of production is operated…
  6. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 6
    GORDONDALE ACQUISITION Acquired Montney Land 7
  7. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 7
    GORDONDALE ACQUISITION HIGHLIGHTS Consolidates a Sizeable and Contiguous Land Base within Birchcliffs Existing Gordondale/Pouce Coupe Area on the Montney/Doig Natural Gas Resource Play The acquired Gordondale Assets include a…
  8. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 8
    GORDONDALE ACQUISITION HIGHLIGHTS De-levers the Balance Sheet The Corporations balance sheet will have estimated pro-forma total debt at December 31, 2016 of 607million based on a purchase price for the Gordondale Acquisition of 625…
  9. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 9
    GORDONDALE ACQUISITION HIGHLIGHTS Low Base Decline Production The Gordondale Assets have a relatively low base production decline rate of approximately 20%, which is in line with Birchcliffs current corporate base production decline…
  10. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 10
    BIRCHCLIFFS HISTORY A Track Record of Execution
  11. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 11
    KEYS TO SUCCESS Executives with proven track record, continuity since inception and significant ownership Management Highly experienced Management Team with excellent technical knowledge and a long history with the company 200…
  12. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 12
    PRODUCTION HISTORY 70,000 62,000 63,000 60,000 49,000 Average Production (boe/d) 51,000(1) 50,000 Compound annual growth of 30% per year since 2005 38,950 40,000 33,734 30,000 25,829 22,802 20,000 18,136…
  13. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 13
    PRO-FORMA CORPORATE RESERVES 900,000 2P 800,000 764 MMboe TP 700,000 PDP The Gordondale Acquisition increases Birchcliffs reserves estimated by 600,000 Deloitte at December 31, 2015: Reserves (Mboe)(2) PDP reserve volumes…
  14. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 14
    CORPORATE NPV10 (BT) 6,000 2P TP 5.0 Billion 5,000 PDP 4,000 NPV10 (million)(2) 3.2 Billion 3,000 2,000 1.5 Billion 1,000 0 (1) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Pro-forma (1) As at…
  15. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 15
    PROVEN TRACK RECORD AS A LOW COST PRODUCER Even in 2012, the lowest average AECO natural gas price in over 10 years, Birchcliff was still able to generate profit. 5 Year Profitability Breakdown: 2011 2012 2013 2014 2015 Average…
  16. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 16
    PROVEN TRACK RECORD AS A LOW COST FINDER 20 PDP FD&A 1P FD&A 2P FD&A 0.9x Cash flow 16 1.2x netback recycle ratios FD&A Cost (/boe) 1.4x 12 1.5x 1.2x 1.5x 1.9x 1.6x 1.9x 1.2x 2.1x 1.3x 2.3x 8 2.5x 2.2x 2.2x 1.5x…
  17. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 17
    PROVEN TRACK RECORD OF PER SHARE GROWTH 45,000 270 600 4,000 Annual Production (boe/d) P+P Reserves per Share (boe/1,000 40,000 Production per Share 240 525 3,500 Proved Annual Production (boe/d) (boe/d/million shares)…
  18. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 18
    HISTORICAL CAPITAL EFFICIENCY AVERAGE DECEMBER TO DECEMBER PRODUCTION; NOT IPs Dec Avg. Dec Avg. 40,354 45,000 40,454 boe/d Additions boe/d 40,000 Dec Avg. Base 28,749 35,000 Dec Avg. boe/d Total Production 27,142 Production…
  19. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 19
    2015 ACCOMPLISHMENTS Achieved annual average production of 38,950 boe/d (15% Y/Y growth) Drilled 32 (31.5 net) horizontal wells including 29 (29.0 net) Montney/Doig horizontal natural gas wells, 1 (1.0 net) Charlie Lake horizontal…
  20. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 20
    LOOKING FORWARD 2016 Plans & Beyond
  21. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 21
    REVISED 2016 CAPITAL EXPENDITURE PROGRAM As a result of the closing of the Gordondale Acquisition, Birchcliff now expects to spend approximately 145.0 million(1)(2) in 2016, up from the 103.5 million that was previously announced on…
  22. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 22
    REVISED 2016 CAPITAL EXPENDITURE PROGRAM 2016 CAPITAL BUDGET: 145.0 MILLION Gross Wells Net Wells Net Capital (millions)(1) Difference in Capital Drilling & Development(2) New Old New Old New Old (millions)(1) Montney D1 Horizontal…
  23. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 23
    BORROWING BASE DETAILS In connection with the closing of the Gordondale Acquisition, Birchcliffs extendible revolving credit facilities have been amended to increase the borrowing base to 950 million from 750 million The borrowing…
  24. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 24
    MODERNIZED ROYALTY FRAMEWORK VS. ALBERTA ROYALTY FRAMEWORK Modernized Royalty Framework (MRF) is expected to have a positive economic impact for Birchcliffs Gordondale Montney Oil and Charlie Lake Light Oil wells vs. Alberta Royalty…
  25. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 25
    MONTNEY/DOIG NATURAL GAS RESOURCE PLAY A Significant Position in a World Class Play
  26. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 26
    MONTNEY/DOIG - A WORLD CLASS RESOURCE PLAY Resource density. Stacked resource up to 300 metres thick. Large areal extent. Extends over 50,000 square miles. Exceptional fracability. Low clay Birchcliff Montney/Doig content, low Poissons…
  27. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 27
    BIRCHCLIFF MONTNEY/DOIG The Gordondale Acquisition adds a fourth commercial development interval in the Montney D2 Large contiguous land base with 407 net sections prospective for the Montney/Doig Birchcliff has contiguous land…
  28. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 28
    STACKED RESOURCE PROVIDES SUBSTANTIAL FUTURE UPSIDE 29
  29. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 29
    LOW DECLINE PRODUCTION All wells are choked initially for better operational efficiency, higher ultimate recovery and reservoir management; this leads to lower declines and subsequently less wells required to maintain production base…
  30. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 30
    PROXIMAL TO INFRASTRUCTURE WITH LONG TERM EXPOSURE TO LNG EXPORT Montney/Doig Birchcliff Pouce Coupe Production Montney/Doig & PCS Gas Plant Owned Infrastructure PCS Gas Plant Nova Pipeline System North American Market…
  31. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 31
    GORDONDALE ACQUISITION Acquired Montney Land 32
  32. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 32
    GORDONDALE BASE PRODUCTION HISTORY Montney D2 discovery well 40,000 2015 2014 Last well drilled in 2014 (on-stream 2015) with peak production of 35,000 boe/d 2013 2012 35,000 2011 2010 2009 2008 and Earlier 30,000 AltaGas Deep…
  33. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 33
    GORDONDALE ENGINEERED COMPLETIONS Gordondale Asset Provides Multilayer Development with Down Spacing Opportunities Lower Montney (D1) Infill & Halo Drilling Middle Montney (D2) Delineation Engineered Completions Unlock Value Liner…
  34. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 34
    GORDONDALE KEY INFRASTRUCTURE Key Natural Gas Processing Infrastructure Existing infrastructure has already AltaGas Gordondale CNRL Progress supported peak production of Sour Deep Cut Gas Plant Sour Shallow Cut Gas Plant…
  35. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 35
    POUCE COUPE Proven asset in development phase Wells in the area show high initial deliverability, low terminal decline and stable long term production Predictable results with improving rates & liquids yields 100% owned and…
  36. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 36
    POUCE COUPE LOWER MONTNEY (D1) TYPE CURVE 2P Reserves: 7.7 Bcfe (sales) 37
  37. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 37
    POUCE COUPE LOWER MONTNEY (D1) CORE AREA COMPLETION EVOLUTION Completion Cost per Stage vs. Number of Stages Lateral Length 18 300 2,500 Number of Stages Lateral Length Completions Cost per Stage Completions Cost per Stage 15…
  38. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 38
    NEW COMPLETION TECHNIQUES IMPROVING POUCE COUPE D1 RESULTS 7.0 6.0 5.0 Op Gas Rate (MMcfd) 4.0 3.0 2.0 Tier 0 Tier 1 1.0 Tier 2 Tier 3 Tier 4 0.0 0 2 4 6 8 10 12 14 16 18 20 22 24 Normalized Flowing Time…
  39. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 39
    POUCE COUPE DRILLING & COMPLETIONS PERFORMANCE Drill Cost Efficiency Yearly Average Drill Speed ( Spud Rig Release) 700 300 650 250 600 550 mD/Day /mD 200 500 450 150 400 35% decrease in /mD from 2007 Drilling twice…
  40. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 40
    ELMWORTH DEVELOPMENT Birchcliff has drilled two successful exploration horizontal wells into the Montney D4 interval, both of which Second Exploration are expected to result in follow up Horizontal drilling and significant future…
  41. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 41
    PCS GAS PLANT The Engine for Future Growth
  42. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 42
    Production Processed 2012 2013 2014 2015 H1 2016 through the PCS Gas Plant Average daily production, net to Birchcliff: Natural gas (Mcf) 59,327 91,666 132,808 163,641 171,422 Oil & NGLs (bbls) 204 527 1,065 1,287 967 Total boe…
  43. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 43
    Corporate Operating Costs vs. % of Natural Gas Sales KEY STRATEGIC Volumes Processed at the PCS Gas Plant 10.00 100% Corporate Operating Cost (/boe) Volume Through PCS Gas Plant ADVANTAGES 8.00 6.00 80% 60%…
  44. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 44
    TCPL SERVICE OVERVIEW TCPL service secured to execute Birchcliffs long term plans Sufficient renewable service that can be cancelled with one year notice; gives ultimate flexibility to future pace of development Secondary service can…
  45. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 45
    PCS GAS PLANT HIGHLIGHTS 100% owned & operated Current processing capacity of 180 19% MMcf/d Subject to commodity prices, Birchcliff expects that the Phase V expansion will be completed in 2017, adding 80 MMcf/d bringing total…
  46. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 46
    PCS GAS PLANT Scenario Analysis
  47. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 47
    IMPROVED PCS GAS PLANT ECONOMICS As of December 31, 2015, Deloittes estimate of DCCET (drill, case, complete, equip and tie-in) costs for our Montney/Doig horizontal natural gas wells decreased to 4.4 million largely due to…
  48. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 48
    ILLUSTRATIVE 80 MMcf/d PCS GAS PLANT BUILD & FILL SCENARIO The chart to the right depicts the Montney/Doig Wells to keep 80 MMcf/d Gas estimated Montney/Doig wells Plant Full for 30+ Years(1) required to keep 80 MMcf/d plant full 30…
  49. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 49
    The table below presents on an annual basis the internally estimated (1) facilities and DCCET capital requirements, (2) operating cash flow and (3) free cash flow (FCF) from an 80 MMcf/d PCS Gas Plant under various AECO natural gas…
  50. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 50
    CHARLIE LAKE LIGHT OIL RESOURCE PLAY Dependable Light Oil Production
  51. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 51
    WORSLEY CHARLIE LAKE LIGHT OIL One 2016 well Essentially 100% W.I. with operatorship continued 18 sections of land and extends and control of wells, pipelines and pool to N.E. off an facilities existing pad at minimal tie-in cost…
  52. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 52
    WORSLEY CHARLIE LAKE LIGHT OIL ACCOMPLISHMENTS SINCE SEPTEMBER 2007 ACQUISITION 2P reserves have increased over 170% to 41.1 MMboe from 15.1 MMboe Production increased over 25% to 4,236 boe/d in 2015 from 3,400 boe/d 2015 year end…
  53. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 53
    WORSLEY AREA RESERVES 45,000 40,000 35,000 30,000 Reserves(1) (Mboe) 25,000 PDP 20,000 TP 2P 15,000 10,000 5,000 0 YE 2007 YE 2008 YE 2009 YE 2010 YE 2011 YE 2012 YE 2013 YE 2014 YE 2015 PDP 6,018 6,395…
  54. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 54
    WORSLEY AREA NPV10 (BT) VS. DELOITTE OIL PRICE FORECAST 1,000 120 900 100 800 5 Year WTI Average /bbl 700 80 600 NPV10(1) (million) 500 60 400 40 300 200 20 100 0 0 YE 2007 YE 2008 YE 2009 YE 2010 YE 2011…
  55. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 55
    PROGRESS CHARLIE LAKE LIGHT OIL First successful Charlie Lake light oil exploration horizontal well drilled in Q4 2014 and brought on production Second Horizontal in December 2014 Exploration Well IP30: 450 boe/d Second successful…
  56. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 56
    BUILDING ON OUR PAST Over 10 Years of Success
  57. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 57
    Record annual average Birchcliffs average daily production was 38,950 boe/d in production of 38,950 2015 compared to 2,793 boe/d in 2005, a compounded boe/d in 2015 annual growth rate of 30% per year over that span. 2,793 boe/d 1…
  58. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 58
    Production Growth 45,000 300 boe/d/million wtd. avg. shares 40,000 250 35,000 Birchcliff has increased production at a 30,000 200 compound annual growth rate of boe/d 25,000 150 20,000 15,000 100 30% since 2005.…
  59. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 59
    Cash Flow from Operations 350 2.50 300 On average, cashflow and cash flow 2.00 250 1.50 per common share have increased millions /share 200 150 1.00 by 10% and 6%, respectively, over 100 0.50 the past five years.…
  60. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 60
    Reserves Growth 700 4,000 3,500 600 Birchcliff has added significant low cost reserves since commencing operations in 2005. On a per 3,000 500 common share basis, PDP, 1P and 2,500 boe/1,000 Shares 400 MMboe 2P…
  61. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 61
    APPENDIX
  62. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 62
    2015 MONTNEY/DOIG RESOURCE ASSESSMENT Reserves and Resource Volumes (Bcfe)(1)(2) Resource Class Raw/Sales Low Estimate Case Best Estimate Case High Estimate Case Cumulative Production(3) Sales 286.2 286.2 286.2 Remaining…
  63. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 63
    ENOUGH RESOURCE TO FILL A ONE Bcf/d LNG TRAIN FOR OVER 30 YEARS 1 Bcf/d LNG Train X 365 Days X 30 Years = 11.0 Tcf BIR Remaining Reserves BIR Contingent Resource as at Dec 31, 2015 as at Dec 31, 2015 1 Bcf/d LNG 3.1 Tcfe + 9.5…
  64. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 64
    2015 YEAR END MONTNEY/DOIG RESERVES 600,000 Drilled 29 HZ M/D wells Drilled 41 HZ 188 (187.9 net) Montney/Doig M/D wells 500,000 horizontal natural gas wells Drilled 25 HZ drilled as of Dec 31, 2015 M/D wells Drilled 22 HZ…
  65. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 65
    SERIES A PERPETUAL PREFERRED SHARES Preferred Share Details Series A Number of Shares 2 million Issue Date August 8, 2012 TSX Trading Symbol BIR.PR.A Issue / Par Price 25.00 per share Quarterly Dividend 0.5000 per share Yield at…
  66. August 2016 Corporate Presentation – Birchcliff Energy Ltd. – slide 66
    SERIES C PREFERRED SHARES Preferred Share Details Series C Number of Shares 2 million Issue Date June 14, 2013 TSX Trading Symbol BIR.PR.C Issue / Par Price 25.00 per share Quarterly Dividend 0.4375 per share Yield at Issue 7.0%…

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