Agenda 1. Q3 2018 Discussion 2. 2019 Outlook Break for Q&A 3. Strategic Priorities 4. Cardium Overview Break for Q&A 5. Other Assets 6. Achieving Our Priorities Q&A & Wrap-up 3
Executive Team David French Andrew Sweerts President and Vice President, Business Chief Executive Officer Development & Commercial David Hendry Mark Hodgson Chief Financial Officer Vice President, Operations and E&P…
Q3 2018 Discussion
Highlights from the Quarter Generally a soft quarter: short on volumes, active development with a strong rate outlook, set against a commodity environment that has stunned to the downside for crude oil differentials and now WTI…
Pricing Assumptions Pricing is a moving target with challenging near term outlook for light and heavy oil differentials Below outlines the two pricing assumptions used to pour our 2019 plans and upside in an improved pricing scenario…
Topics of Interest Post Q3 Release Impact of WTI and differentials on the business Every US1 Edmonton Par reduction is a 7MM/year movement in FFO Expect Q4 FFO will decrease (Q3 reported was 26 MM) Anticipate Q4 FFO will be in…
Willesden Green H2 2018 Program Summary Program execution is ahead of Crimson Lake schedule and under budget R8W5 INDEX MAP Rig One 18-9 Pad (3 Wells): On production 2 14-1 Pad (2 Wells): Awaiting tie-in 3 kms 3 1-36 Pad (2…
8-9 Cardium Pad (3 wells) Oct 18, 2018 Simultaneous Operations Flowback Tanks Flare stack Frac Pumps Testers Water Supply Crane for Coiled Tubing Lubricator Data Van Coiled Tubing Unit Sand Haulers Chem Van…
8-9 Completion Results Willesden Green Flowback Analysis Cumulative Oil (m3) vs. Time 800 '17/'18 OBE Offsets Early flowback from the H2 2018 H2 2018 wells 700 08-09 pad suggests well performance will be comparable to 11-03 and…
14-01 Completion Results Willesden Green Flowback Analysis Cumulative Oil (m3) vs. Time 300 '17/'18 OBE Offsets H1 2018 Wells H2 2018 wells 14-1 Pad (2 wells) 250 Accumap Avg. UWI Peak IP30 Oil Daily Oil 100/3-13 351 bbl/d 414…
Asset Retirement Reduction OBE has made significant progress on Asset Retirement Obligation (ARO) through divestment and cost efficiencies in the last 5 years The AERs new Area Based Closure (ABC) program enables a clear path to…
Asset Retirement Obligation Improvement Legacy Abandonment 2019-2031 OBE Legacy properties are scattered across Alberta Expect to involve 2-3 fields per year Focusing our 2019 Total spend over 12 years will be 35% less ABC…
Select Legacy Property Shut-Ins AERs ABC program creates a vehicle for disciplined ARO management With divestment options exhausted, select Legacy properties will be shut-in to improve cash flow Q4 2018 Actions Shut-In 24 Legacy…
Willesden Green Cardium Wells have Resilient Economics Exceptional 8/boe operating expense in Crimson allows for strong netbacks despite volatile pricing environment H2 2018 program anticipated to come on stream as planned, but OBE…
2019 Outlook
Key Tenets of our 2019 Plan Conservative, balance sheet oriented development program with optionality to follow the oil market In light of Q1 differential outlook, we are planning a base spending platform of 65MM in H1 2019 and the…
Willesden Green Focus Why We Like It Delivered some of the best wells in the entire Cardium Play in 2018 with resilient economics in a volatile price environment Crimson Lake Willesden Green The best netbacks within Type Curve &…
H1 Capital Program H1 2019 program anticipates 65MM of total capital Includes 52MM of Development Capital 2019 Cardium spend includes completion and tie in costs for five 2018 Willesden Green wells not fracture stimulated by the end…
2019 Capital Bookends Plan Inputs FY 2019 Capital & Well Count Optionality Improved Pricing Optionality Deep Basin Balance sheet flexibility is a Other Improved Pricing Optionality priority Development 95 Cardium 40 Uncertainty…
H2 Capital Program H2 2019 program calls for 55MM of Total Capital Includes 40MM of development capital H2 Total Capital H2 Development Capital millions millions Improved Pricing Development Improved Pricing Development Other…
2019 Plan Production & Cost Guidance 2019 Production Optionality 2019 Guidance Metrics boe/d, includes impact of legacy shut in Guidance Guidance Metric Low High Improved Pricing Optionality FY 2019 Production 28,000 29,000 (boe…
Capital Allocation Optionality Balance Organic Sheet Cardium Strength Growth Focus on Takes priority in First capital expenditure at a Strategic near term disciplined pace Priorities & Creating Shareholder Manage Return Value…
Asset Overview Production Boe per day 35,000 Peace River 30,000 Cold flow heavy oil Manage base production and 25,000 commercialize 20,000 15,000 10,000 Deep Basin 5,000 Liquids rich deeper development underlying Cardium -…
Cardium is our Business 29
The Obsidian Energy Cardium Position is Exclusive High quality Leading reservoir and Cardium the largest land inventory base Supported by value Cardium is the Cardium play is fully maximizing spacing delineated and and completion…
Revitalization of the Cardium Play Historical Cardium Pool Historical Cardium Pool Historical Willesden Green Oil Production (bbl/d) Total Well Count () Cumulative Oil Production (Mbbl/d) 180,000 7,000 Horizontals 70 Horizontals…
The Obsidian Energy Cardium Advantage 60% more sections than next largest R10W5 INDEX MAP Cardium player in Pembina and Willesden Green Only 16% of each quarter section currently have a horizontal well, less than all other…
The Broader Cardium Opportunity Value proposition is unique to each area 12 Month Cumulative Oil (Mbbl) per well Pembina Cardium Hz well Willesden Green Cardium Hz well OBE 17/18 R5W5 Ferrier Cardium Hz well Willesden Green OBE…
Breaking Down the Cardium Play Fairways - A Large High-graded Inventory West Pembina Central Pembina R10W5 INDEX MAP Individual fairways and Well established unit boundaries in productive trend historically pressure significantly…
Crimson Lake The Obsidian Energy flag pole for revitalized primary development on our Cardium acreage Banked oil from historical pressure maintenance in WGU9 Top quality reservoir previously ignored by historical development due to…
Crimson Lake Economics Cost Inputs 2,200m 2,6 00m Type Curve Drill & Complete MM 3.2 3.5 Rate vs Time Equip & Tie MM 0.5 0.5 Cumulative Oil vs. Time Total MM 3.7 4.0 700 180 Production Cumulative Prod (mboe) 160 600…
Drilling Longer Wells, Efficiently OBE Intermediate Wells 0 Well Length 2015 Wells Drilling two mile wells reduces fixed Surface Casing 2016 Wells drilling costs 2017 Wells Mobilization 2018 Wells Construction 1,000…
Optimized Well Design to Maximize the Economics of our Acreage Inter-well Spacing Inter-frac Spacing Lateral Length IRR & NPV Decisions IRR & NPV Decisions IRR & NPV Decisions IRR NPV IRR NPV Practical Cutoff NPV Optimal…
Crimson Lake Cost Reduction Trajectory Drill, Complete, Equip & Tie-In Costs thousands Surveying 3,700 (10) (20) (150) Large program brings cost efficiency and flexibility (150) Construction Reuse of existing pads, multi- well…
East Crimson Moving the Crimson success eastward and onward Continued Eastward extension of the Crimson Lake development program Area has been de-risked by recent drilling results supporting the revitalized development Shared and…
East Crimson Economics Cost Inputs Type Curve Drill & Complete MM 3.5 Rate vs Time Equip & Tie MM 0.5 Cumulative Oil vs. Time Total MM 4.0 600 140 Production Cumulative Prod (mboe) 500 120 EUR Mboe 170 Production Rate…
Targeting Oil Banks in Historic Waterflood Targeting Oil Banks Horizontal development in pressure R6W5 maintained fields like East Crimson has WGCU1 two key target types: Banked oil on area edges where legacy drilling has…
West Pembina Proven oil rich Cardium trend with undeveloped primary development acreage Significant offsetting production from established Cardium players throughout the West side of Pembina Underdeveloped halo and core acreage West…
West Pembina Economics Cost Inputs Type Curve Drill & Complete MM 2.7 Rate vs Time Equip & Tie MM 0.5 Cumulative Oil vs. Time Total MM 3.2 300 120 Production Cumulative Prod (mboe) EUR Mboe 200 250 100 Production Rate…
Central Pembina The epicenter of low decline and pressure maintained development Strong technical model is the foundation for additional development from unswept fairways Ability to de-risk through geological and reservoir modelling…
Central Pembina Economics Cost Inputs Type Curve Drill & Complete MM 2.0 Rate vs Time Equip & Tie MM 1.0 Cumulative Oil vs. Time Total MM 3.0 180 60 Production Cumulative Prod (mboe) 160 EUR Mboe 280 50 Production…
Owned and Operated Infrastructure Kit to Handle our Development Plans Pipeline connected to Drayton Valley system results in low transportation costs Willesden Green Region Pembina Region 12,000 bbl/d emulsion capacity 65,000 bbl/d…
Cardium 3 Year Forecast Cardium on its own is self funded and generates 60MM of Free Cash Flow per year Growing the Cardium by 20% with depth of inventory to back fill higher price scenario Cardium feeds the rest of the business with…
Other Assets Deep Basin, Peace River & AB Viking 50
Deep Basin: Company Under a Company Ownership in key plant and pipeline R8W5 Unit land OBE below Base Cardium land infrastructure allows for development and OBE Cardium WI land operational synergies with Cardium program Bigoray…
Multiple Horizons Provide Inventory Optionality OBE Type Logs Base Cardium to Base Mannville FORMATION CARDIUM COLORADO SHALE NOTIKEWIN CRETACEOUS SPIRIT RIVER 286 net sections Near-term Development FALHER…
Mannville Falher Type Curve Type Curve Rate vs Time Cost Inputs Cumulative Oil vs. Time Drill & Complete MM 3.0 500 300 Equip & Tie MM 0.8 450 Cumulative Prod (mboe) Total MM 3.8 250 Production Rate (boe/d) 400 Production…
Large Peace River Presence R19W5 Cold Flow Inventory Stable, heavy cold-flow oil base production Total Locations 251 Contiguous and extensive acreage with ample inventory Rainbow pipeline Simultaneous operations and multi-leg,…
Alberta Viking Asset Strategy Well understood play, proximal to multiple, Geographic location is accessible with minor successful offset producers disruption during breakup Low geological risk development with drill Significant owned…
Generate meaningful Year over Year Cash Flow Growth Managing operating costs & limiting Spending within FFO to manage debt discretionary spending in continued balance and reduce overall leverage differential environment with ability…
Generate Meaningful Year over Year Cash Flow Growth Targeting focused capital programs driven by high-graded investment metrics (IRRs 50-100%, Capital Efficiency 20,000 /boe/d) Focus on liquids weighting to target top tier…
Improve Balance Sheet Strength Maintain capital discipline to improve debt picture through spending within Funds Flow from Operations Focus on light oil higher margin development Evolve Debt/EBITDA to 1.5X over coming 2-3 years…
Simplify and Grow the Light Oil Business Through targeted investment, grow Cardium light oil platform 30% over three years Maintain 33 operated secondary recovery projects to support top tier corporate decline (25-35%) Corporate…
Why invest in Obsidian Energy Significant rate of change in cash flow 10-15% Largest Cardium Flexibility to CAGR Development Ample acreage manage drilling infrastructure holder with a commodity catalysts head room low…
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