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1Q 2019 Earnings Presentation – Seven Generations Energy Ltd

Seven Generations Energy Ltd · May 3, 2019 · 29 slides

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Slides

  1. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 1
    TSX: VII CORPORATE PRESENTATION May 2019
  2. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 2
    SEVEN GENERATIONS ENERGY Serving our stakeholders through: Differentiated attention to selection, development & replenishment of the lowest supply cost resource Best in class execution through safe, responsible, innovative and…
  3. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 3
    7G CORPORATE PROFILE Corporate Highlights Premier Alberta Montney Pure-Play Canadas Largest Condensate Producer 73 Mbbl/d of condensate sales in Q1/19 150 bbls/MMcf condensate-gas-ratio Diversity of Product Streams and Markets…
  4. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 4
    THE CORNERSTONES OF OUR BUSINESS Return of Capital Return on Capital Free Cash Flow Financial Market Sustainability Resource Access Quality & Low Supply Cost Stakeholder Strong Service balance sheet Large,…
  5. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 5
    7GS TRACK RECORD OF INDUSTRY LEADING RETURNS 7G Adjusted Funds Flow 7G Cash Return on Invested Capital (per Diluted Share)(2) (CROIC)(2) 4.60 19.1% 3.50 to 4.75 17.9% 3.37 17.4% at 50 - 65 16.4% WTI (1) 2.32 1.46 1.53…
  6. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 6
    7GS STRATEGIC EVOLUTION TOWARD FREE CASH FLOW (1)(2)(3) Adjusted Funds Flow Production (MM) (Mboe/d) 2,000 250 1,500 200 150 1,000 100 500 50 0 0 2014 2015 2016 2017 2018 2019E Capital Investments Free Cash Flow (3) As a % of…
  7. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 7
    MARKET ACCESS THAT DIFFERENTIATES 7G Gas Market Sales Points AECO 8% AECO 10% AECO 5% Dawn 15% Dawn 15% Dawn 15% Ventura 4% Malin 13% Gulf 18% Gulf 24% Gulf 26% Chicago 55% Chicago 49% Chicago 41% GTN: 90 MMcf/d…
  8. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 8
    CANADIAN CONDENSATE MARKET OVERVIEW Forecast Supply & Demand of WCSB Condensate (Mbbl/d)(1)(3) Edmonton Condensate vs. Crude Oil Prices (US/bbl)(2) 800 Supply grew faster than demand 70 + Maintenance & curtailments impacts 60 50…
  9. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 9
    A HIGH QUALITY RESOURCE Infrastructure Footprint 15+ years Natural Gas Processing: of core inventory 1 Bcf/d capacity Nest 1/2/3 510 MMcf/d owned & Upper & Middle Montney operated at Cutbank/Lator 250 MMcf/d owned & operated at…
  10. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 10
    2019 BUDGET 2019 Guidance Sustaining Capital 1.1 billion Nest 2 Development Discretionary Capital 0.15 billion Value Total Capital Investment 1.25 billion Enhancing Average Production 200 - 205 Mboe/d H1/19 Production 195 - 200…
  11. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 11
    DEVELOPMENT ROADMAP Define Nest 2 Return to Nest 1 for development Core Integrate Nest 3 development sub-regions Step into Nest 2 East Areas Define Nest 1 perimeter Step into Nest 1 Grow Nest 3 to pipeline capacity Evaluate…
  12. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 12
    2019 CAPITAL ALLOCATION GUIDING PRINCIPLES Dollars (MM) Free cash flow upside from higher prices 2,000 1,800 70 WTI 1,600 1,400 55 WTI 1,200 50 WTI Delineation 1,000 800 600 2019 Free cash flow upside Sustaining from…
  13. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 13
    NEST 3 DEVELOPMENT 80 MM connector to broader Nest 2 infrastructure 30 MM river crossing pipeline 2019 Development Plans Beyond 2019 Up-front capital investment enables future Sub-8,000/boe/d DCET capital efficiency…
  14. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 14
    NEST 2 DEVELOPMENT Nest 2 2019 Activity Condensate gas ratios (bbl/MMcf) vs. time (normalized month) 500 0 0 12 24 2017 Nest 2 Type Curve North South East West Liquids Nov 2017 May 2018 2019 & Gas Details Budget Update…
  15. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 15
    NEST 1 DEVELOPMENT IP60 (2 HZ) Cumulative condensate (Mbbl) vs. time (days) 1,413 1,963 boe/d Nest 1 2019 Activity 64% Condensate 300 IP96 2,030 boe/d 55% Condensate 250 IP80 1,203 boe/d 200 Flowtest IP20 (7 HZ) 1,068 1,972…
  16. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 16
    LOWER MONTNEY POTENTIAL Triple-stack test Comingled vertical test (5d): 2MMcf gas; 162 bbls condensate 2,800-3,000 Partial triple-stack meters IP90: 1,048 boe/d Partial triple-stack 72% condensate IP30: 1,250 boe/d…
  17. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 17
    ROBUST RESERVE METRICS BACKSTOP VALUATION UPSIDE Risked 1.32 billion boe Development Risked Unclarified Contingent (2C) Resource Development (23 MMboe) Pending - Best estimate of economically recoverable resource (1,300 MMboe)…
  18. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 18
    SUMMARY OF PREMIUM SINGLE WELL ECONOMICS & OTHER INVENTORY Nest 2 Core Nest Weighted Nest 1 Nest 3 Development Inventory Average South East West North IP30 (boe/d) 1,500 1,950 - 2,350 2,000 1,900 15 years IP365 (boe/d) 775 1,150…
  19. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 19
    THE 7G INVESTMENT THESIS Expanding free cash flow Moderating declines reduce sustaining capital Major gas processing investments completed Delivering operating excellence Execution, optimization and cost control Consistent…
  20. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 20
    TSX: VII APPENDIX
  21. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 21
    7GS GUIDING PRINCIPLE STAKEHOLDER SERVICE Stakeholder Differentiation We believe that companies have only the rights given to them by society. While people have a natural entitlement to basic rights, corporations are an instrument…
  22. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 22
    2019 BUDGET: BALANCE SHEET MANAGEMENT Net debt to trailing 12 month adjusted EBITDA Comfortably levered in lower prices 2.4x < 2.0x Target 2.1x 1.8x 1.5x Potentially under- 1.3x 1.2x levered with higher prices 0.9x 2015…
  23. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 23
    HEDGING STRATEGY Quarterly Revenue (/boe) 60 Hedging program has 12.00 Realized Hedge Gain/(Loss) (b/oe) reduced revenue volatility by 25% Price Realization (/boe) 50 8.00 40 4.00 30 0.00 20 -4.00 Hedging…
  24. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 24
    CURRENT HEDGE POSITIONS AS AT MARCH 31, 2019 Crude Oil CAD WTI Collars CAD WTI Sold Puts USD WTI Swaps and Collars USD WTI Sold Puts bbl/d C/bbl bbl/d C/bbl bbl/d US/bbl bbl/d US/bbl RoY 2019 21,333 58.05 75.69 6,000 41.11 10,667…
  25. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 25
    SELECTED FINANCIAL AND OPERATIONAL INFORMATION VII - Recent Quarterly Results OPERATING RESULTS Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017 YE 2018 YE 2017 Average daily production Condensate (1) (mbbl/d)…
  26. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 26
    SWEET SPOT IN THE MONTNEY Over Pressured High Productivity Brittle Rock High Recovery Factor Thickness Large Resources in Place Lower Temperature High Liquids Content 1) Sources: Canadian Discovery Ltd. & Graham Davies…
  27. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 27
    RESPONSIBLE DEVELOPMENT HIGHLIGHTS Safety Environment Community Total Recordable Incident and Lost Time Injury Frequency Rates 1.5 0.20 0.15 1.0 0.10 0.5 0.05 0.0 0.00 2014 2015 2016 2017 2018 2019 TRIF LTIF Q1…
  28. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 28
    DEFINITIONS AND ABBREVIATIONS A annual m metres AECO physical storage and trading hub for natural gas on the TransCanada Alberta transmission Mbbl thousand of barrels system Mboe thousands of barrels of oil equivalent Alliance…
  29. 1Q 2019 Earnings Presentation – Seven Generations Energy Ltd – slide 29
    For more information: Brian Newmarch Vice President Capital Markets 1.403.767.0752 bnewmarch7genergy.com Ryan Galloway Investor Relations Manager 1.403.718.0709 ryan.galloway7genergy.com www.7genergy.com TSX: VII

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