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October 2016 Corporate Presentation – Pengrowth Energy Corp

Pengrowth Energy Corp · Oct 25, 2016 · 59 slides

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Slides

  1. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 1
    CORPORATE PRESENTATION October 2016 CORPORATE PRESENTATION 1
  2. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 2
    CORPORATE OVERVIEW Intermediate Canadian oil and natural gas producer with assets in Western Canada 28 years of operations Publically listed on both the Toronto and New York Stock Exchanges Toronto (PGF) New York (PGH) High…
  3. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 3
    CORPORATE PROFILE Corporate Summary Q2 2016 Avg. Daily Production 56,735 boe/d Production Mix1 62% liquids/38% gas Corporate Decline2 12% Undeveloped Land (net) 430,000 acres Reserves (2P YE 2015)3 569.1 million boe Reserve Life…
  4. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 4
    SHORT-TERM STRATEGY 2016 PRIORITIES: FOCUS ON THE THINGS WE CAN CONTROL 1 Prudent capital spending 2 Cost reductions 3 Reduce indebtedness 4 Continue with asset dispositions CORPORATE PRESENTATION 4
  5. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 5
    WHAT WE ARE DOING TO SURVIVE TO THRIVE IN 2016 FOCUSING ON THE THINGS WE CAN CONTROL Targeting debt reduction with free cash flow, monetization of hedges, proceeds from asset sales and suspension of the dividend Significant hedge book…
  6. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 6
    FINANCIAL OVERVIEW CORPORATE PRESENTATION 6
  7. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 7
    DEBT STRATEGY AVAILABLE OPTIONS TO HANDLE MATURING DEBT Least costly Repay with cash on hand Long-term costs to Early redemption/repurchase Sell GORRs Company Monetization of mid-stream assets Drilling funds Extend…
  8. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 8
    BALANCE SHEET MANAGEMENT LONG-TERM DEBT STRUCTURE IS PRIMARILY MADE UP OF PRIVATE TERM NOTES DEBT COMPOSITION (AS AT JUNE 30, 2016) COVENANT COMPLIANCE (Q2 2016) Convertible Debentures (Cdn million) June 30, 2016 8% Credit…
  9. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 9
    BALANCE SHEET MANAGEMENT DEBT REDUCTION EFFORTS ARE PROGRESSING (CDN MILLION) 108 118 1,857 1,749 1,631 YE 2015 Changes in foreign Repayment of credit Q2 2016 exchange facilities Total debt reduced by 52 million…
  10. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 10
    BALANCE SHEET MANAGEMENT LONG-TERM DEBT MATURITIES (MILLION) Convertible Debentures (Cdn) Credit Facility (Undrawn) Long-term Notes () Long-term Notes (Cdn) 1,000 Long-term Notes (US) 127 800 15 400 265 25 195 15 116…
  11. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 11
    BALANCE SHEET MANAGEMENT COMMITTED BANK FACILITY PROVIDES SUFFICIENT LIQUIDITY 1.0 billion committed credit facility is unsecured and covenant based Key covenants: Senior debt/EBITDA of 3.5x Total debt/EBITDA of 4.0x Senior…
  12. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 12
    BALANCE SHEET MANAGEMENT BRIDGING THE 2017 DEBT MATURITY GAP (CDN MILLION) 140 300 640 200 1,2 Maturing debt Excess cash from Expected 2016 disposition Credit facility 3 operations at YE 2016 proceeds…
  13. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 13
    RISK MANAGEMENT PROGRAM PROVIDING FUNDS FLOW PROTECTION IN LOW COMMODITY PRICE ENVIRONMENT HEDGE POSITIONS AS AT SEPTEMBER 30, 2016 Crude Oil1 Natural Gas Volume Percentage Average Volume Percentage Average Mark to Hedged2 Price…
  14. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 14
    HEDGES HELP ENSURE STABLE FUNDS FLOW DESPITE SIGNIFICANT DECLINES IN COMMODITY PRICES Funds flow from operations ( million) 140 Quarterly Funds Flow Change in US WTI Oil Price Change in AECO Gas Price 0% 120 -10% % change in…
  15. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 15
    OPERATIONS OVERVIEW CORPORATE PRESENTATION 15
  16. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 16
    LONG-TERM STRATEGY THRIVE AND GROW Focus on long-life, low cost and competitively 1 advantaged assets Continue with disciplined capital 2 investment strategy Exploit significant long-term development 3 and resource…
  17. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 17
    PENGROWTHS RESOURCE BASE PORTFOLIO WITH INCREASING FOCUS ON OIL AND LIQUIDS DEVELOPMENT CORPORATE PRESENTATION 17
  18. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 18
    2016 CORPORATE GUIDANCE Metric Guidance* Production breakout Capital Budget (million) 60 to 70 Light oil (bbl/d) 12,500 Heavy oil (bbl/d) 300 Average daily production (boe/d) 56,000 to 58,000 Thermal oil (bbl/d) 15,700 Royalties (%)…
  19. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 19
    LONG-TERM DEVELOPMENT STRATEGY Large accumulations Long life assets CONVENTIONAL ASSETS Low declines THERMAL Low cost structure ASSETS Swan Hills Low sustaining capital Cardium Lindbergh Montney SUSTAINABLE ENTITY Barbell…
  20. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 20
    LONG-TERM DEVELOPMENT TWO KEY ASSETS PROVIDE OVER 11 BILLION OF DEVELOPMENT OPPORTUNITIES Thermal Oil Montney Gas Lindbergh SAGD Groundbirch/Bernadet 6.6 billion of future 4.7 billion of future development potential development…
  21. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 21
    OPERATING ASSETS 1. LINDBERGH 2. MONTNEY 3. OLDS / GARRINGTON 4. SWAN HILLS CORPORATE PRESENTATION 21
  22. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 22
    LINDBERGH THERMAL OIL 6.6 BILLION OF LONG-TERM REINVESTMENT OPPORTUNITIES 263 MMbbls 15,532 bbl/d 2P reserves1 Current production2 Large high quality resource 6.6 billion of future capital reinvestment potential (2P 3.9…
  23. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 23
    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…
  24. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 24
    LINDBERGH COMMERCIAL PROJECT FIRST COMMERCIAL PHASE CONTINUES TO RAMP UP Commercial project Three well pads on production for 16 months Pad D05 with eight wells pairs Pad D03 with seven well pairs Pad D02 with five well pairs…
  25. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 25
    LINDBERGH COMPETES WITH LOW COST PRODUCTION GLOBAL RESOURCES PRODUCTION COST CURVE Average break even Oil Extra heavy oil Sands Ultra Deepwater Onshore rest of world Deepwater Onshore 72 Cost (US per barrel) Russia…
  26. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 26
    CAPITAL COST ESTIMATES DOWN 20 PERCENT YEAR OVER YEAR LINDBERGH PHASE TWO CAPITAL COST ESTIMATES PENGROWTH PHASE TWO INTERNAL COST ESTIMATES* Capital Investment ( million) 20 percent reduction May-15 Oct-15 Nov-15 Feb-16…
  27. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 27
    LINDBERGH COMMERCIAL PRODUCTION PHASE ONE PRODUCTION CONTINUES TO GROW 18,000 14.0 16,000 12.0 14,000 Instantaneous Steam-Oil Ratio (ISOR) Commenced steaming 10.0 Bitumen Production (bbl/d) 12,000 operations on 2016…
  28. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 28
    LINDBERGH COMMERCIAL PROJECT TRADING LOWER IP RATES FOR GREATER RECOVERABLE RESERVES Relative Permeability - Low permeability = lower IP rates Greater net pay = larger recoverable reserves Increase in net pay by 1 m adds 100…
  29. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 29
    PILOT RESULTS POINT TO HIGHER RECOVERY RATES LINDBERGH PILOT PERFORMANCE EXCEEDING 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 bbl EUR…
  30. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 30
    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…
  31. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 31
    LINDBERGH PROVIDING STRONG OPERATING CASH FLOWS (Cdn unless noted otherwise) Q3 2015 Q4 2015 Q1 2016 Q2 2016 WTI (US/bbl) 46.43 42.17 33.52 45.60 WCS differential (US/bbl) 13.09 14.48 14.24 13.31 WCS (US/bbl) 33.34 27.69 19.28 32.29…
  32. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 32
    OPERATING ASSETS 1. LINDBERGH 2. MONTNEY 3. OLDS / GARRINGTON 4. SWAN HILLS CORPORATE PRESENTATION 32
  33. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 33
    MONTNEY GAS SIGNIFICANT DEVELOPMENT INVENTORY 8.0 Tcf 2,160 boe/d Petroleum Current production2 initially-in-place (PIIP)1 Large high quality resource 4.7 billion of future capital reinvestment potential Groundbirch (2P 690…
  34. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 34
    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)…
  35. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 35
    PENGROWTH MONTNEY OVERVIEW MULTIPLE PLAYS WITH LONG-TERM GROWTH POTENTIAL Bernadet Groundbirch 32.6 sections (100 percent 21 gross sections (90 percent working interest) working interest) Pengrowths best estimate of Pengrowths…
  36. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 36
    MONTNEY DEVELOPMENT POTENTIAL MULTI-ZONE DEVELOPMENT OPPORTUNITIES BERNADET GROUNDBRICH U3 U1 Upper U1 Lower M1 U2 U3 L1 Upper L1 Lower Four prospective and proven sub-zones thought to exist within the Montney 2014…
  37. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 37
    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 (…
  38. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 38
    GROUNDBIRCH MONTNEY WELL PERFORMANCE WELLS DRILLED IN 2014 OUTPERFORMING 2010 (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 6.5 700.0 Frac Stages…
  39. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 39
    OPERATING ASSETS 1. LINDBERGH 2. MONTNEY 3. OLDS / GARRINGTON 4. SWAN HILLS CORPORATE PRESENTATION 39
  40. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 40
    OLDS/GARRINGTON MULTI-ZONE LIQUIDS DEVELOPMENT OPPORTUNITIES 62.9 MMboe 15,740 boe/d 2P reserves 1 Current production2 Large, contiguous land base with access to multi-tier development opportunities Over 500 net (unrisked)…
  41. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 41
    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 480 gross sections of…
  42. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 42
    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…
  43. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 43
    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)…
  44. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 44
    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%…
  45. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 45
    OPERATING ASSETS 1. LINDBERGH 2. MONTNEY 3. OLDS / GARRINGTON 4. SWAN HILLS CORPORATE PRESENTATION 45
  46. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 46
    SWAN HILLS LOW DECLINE, STRONG CASH FLOW LIGHT OIL OPPORTUNITY 55.0 MMboe 10,100 boe/d 2P reserves1 Current production2 World class conventional and unconventional asset Cash flow generating engine Limited development capital…
  47. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 47
    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…
  48. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 48
    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…
  49. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 49
    SUMMARY CORPORATE PRESENTATION 49
  50. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 50
    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 Reduced…
  51. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 51
    APPENDIX CORPORATE PRESENTATION 51
  52. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 52
    FINANCIAL AND OPERATING HIGHLIGHTS SECOND QUARTER RESULTS SHOW CONTINUED PERFORMANCE IN DELIVERING RESULTS Three Months Ended June 30 ( millions except per share and per boe amounts) 2016 2015 Production (boe/d)1 56,735 74,113 Nat.…
  53. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 53
    TOTAL DEBT CONTINUITY TOTAL DEBT BEFORE WORKING CAPITAL CONTINUITY Continuing with our strategy of reducing debt in 2016 (Cdn millions) Total debt at December 31, 2015 1,856.5 Increase (decrease) due to: Foreign exchange impact…
  54. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 54
    LARGE RESOURCE BASED ASSETS BUILDING THE FOUNDATION FOR LONG-TERM GROWTH 569 Million boe of 2P reserves* Extensions and improved recovery reserve gains of approximately 88 million boe in 2015 Positive technical revisions of…
  55. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 55
    2015 RESERVES SUMMARY BUILDING THE FOUNDATION FOR LONG-TERM GROWTH 569 Million boe of 2P reserves1 Company interest Total Proved (1P) reserves of 252 million boe and Proved plus Probable reserves (2P) of 569 million boe1 Replaced…
  56. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 56
    2015 RESERVES CONTINUITY* CONTINUED RESERVES GROWTH DESPITE SIGNIFICANT ASSET DISPOSITIONS AND REDUCED CAPITAL SPENDING Proved Proved plus probable (Mboe) (Mboe) December 31, 2014 310,051 557,350 Extensions and improved recovery…
  57. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 57
    2015 RESERVE REPLACEMENT COSTS FINDING, DEVELOPMENT AND ACQUISITION COSTS IMPROVING Three-year Weighted 2015 2014 Average Proved Proved Proved Proved Proved Proved plus plus plus Probable Probable Probable Excluding Future…
  58. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 58
    TAX POOLS NO CASH INCOME TAX EXPECTED TO BE PAYABLE UNTIL AT LEAST 2021 Tax Pools as at December 31, 2015 Category (million) Canadian Oil and Gas Property Expense 445 Canadian Development Expense 564 Undepreciated Capital…
  59. October 2016 Corporate Presentation – Pengrowth Energy Corp – slide 59
    2100, 222 3rd Avenue SW Calgary, AB, Canada T2P 0B4 Tel 403.233.0224 Toll-Free 1.800.223.4122 Fax 403.265.6251 INVESTOR RELATIONS Toll-Free 1.855.336.8814 Email investorrelationspengrowth.com Website www.pengrowth.com CORPORATE…

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