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Corporate Presentation – Penn West Petroleum Ltd.

Penn West Petroleum Ltd. · Jan 1, 2014 · 58 slides

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Slides

  1. Corporate Presentation – Penn West Petroleum Ltd. – slide 1
    Corporate Presentation January 2014
  2. Corporate Presentation – Penn West Petroleum Ltd. – slide 2
    Business Districts Listing TSX: PWT NYSE: PWE Big Hill Market Capitalization(1) 4.5 billion Shares Outstanding(1) 490 million Liquidity(2) TSX: 1.8 million NYSE: 1.5 million Switchgrass 2013 Production Forecast 135 - 137 mboe/d (64%…
  3. Corporate Presentation – Penn West Petroleum Ltd. – slide 3
    Penn West Value Proposition Maximize return to shareholders through efficient development and production of established light oil resource Target Best-in-Basin Operator Status Reliable Production Performance Improving Capital…
  4. Corporate Presentation – Penn West Petroleum Ltd. – slide 4
    Changing to Become Canadas Leading Conventional Liquids Producer Target debt to funds flow ratio of 1.0 1.5x(1)(3) Target 1.5 2.0B in asset Expected annual sustainability ratio of 110%(1)(3) sales by 2015 Capital program on average…
  5. Corporate Presentation – Penn West Petroleum Ltd. – slide 5
    Penn Wests Long-Term Plan Delivers Value Added Liquids Growth & Financial Performance 200 2,000 Annual Average Production(2) 18.7% CAGR(4) 1,500 Funds Flow(1)(2)(3) 150 (MM) (mboe) 1,000 7.3% CAGR(4) 100…
  6. Corporate Presentation – Penn West Petroleum Ltd. – slide 6
    Q3 Financial & Operating Highlights Funds Flow Bridge Production Bridge 330 141,000 140,083 139,000 310 12 Production (boe/d) 137,000 20 (1) 293 135,000 2,754 133,712 MM 290 (3) (12) 133,000 277 (7,912) (232)…
  7. Corporate Presentation – Penn West Petroleum Ltd. – slide 7
    2014 Capital Budget Focused on Core Oil Resources & Balanced Across All Quarters 2014 Capital Allocation(1) (MM) Corp / Other Focus of 2014 capital budget is on maximizing 47 Infrastructure / profitability and capital efficiency…
  8. Corporate Presentation – Penn West Petroleum Ltd. – slide 8
    Strategic Review Process Penn Wests Long-Term Plan Strongly Supported Target oil production CAGR(2) 12.6% Target funds flow CAGR(2) 18.7% Cardium, Viking, Slave Point Focus on highest return projects Non-core Asset Focusing…
  9. Corporate Presentation – Penn West Petroleum Ltd. – slide 9
    What Will Not Change Penn West Values Our commitment to the safety of our employees and contractors Our commitment to protecting our environment Be a people place where high performance matters and potential is realized Have…
  10. Corporate Presentation – Penn West Petroleum Ltd. – slide 10
    Long-Term Plan Overview Repositioning Penn West For Success Prioritized light oil development target increasing liquids weighting to 80% by 2018 Target total production CAGR(1) of 7.3%; oil production CAGR(1) of 12.6% Cardium is…
  11. Corporate Presentation – Penn West Petroleum Ltd. – slide 11
    Change Leading to Real Growth In The Plan Period Funds Flow Netback(1)(2) Oil production grows at a 12.6% CAGR(3) target 45 Netback(2) grows at a 10.6% CAGR (3) target 40 Translates into a 14.5% funds flow per debt 35 /boe…
  12. Corporate Presentation – Penn West Petroleum Ltd. – slide 12
    Operated Development Capital Quality Assets + Disciplined Investment Program = Value Added Growth Total operated development capital target of 4.7B over five years Cardium is the key development play with 2.5B invested during the plan…
  13. Corporate Presentation – Penn West Petroleum Ltd. – slide 13
    Inventory & Internal Rates of Return Solid Full Cycle Economic Return Programs with Multi-Year Running Room Significant inventory remains beyond long-term plan Expect incremental inventory from future appraisal at Slave Point,…
  14. Corporate Presentation – Penn West Petroleum Ltd. – slide 14
    Improve Capital Efficiency Focused on Value Added Reserve Metrics Development Replacement Ratio(1)(2) Operated Development Cost(3) 250% 20 Reserves Replacement Ratio 200% 18 150% 16 /boe 100% 14 50% 12 0% 10…
  15. Corporate Presentation – Penn West Petroleum Ltd. – slide 15
    Focus on the Balance Sheet Reset and Maintain Discipline Plan anticipates 485MM of dispositions closing by end of 2013 and up to a further 1.5B by end of 2014 - Potential that all or part of incremental 1.5B could close in 2014 Future…
  16. Corporate Presentation – Penn West Petroleum Ltd. – slide 16
    Focus on the Balance Sheet Add Stability; Reduce Risk Key financial covenant in both credit facility and private notes is 3.0x senior debt / EBITDA - No debt to capitalization covenant concerns expected through 2018 Post…
  17. Corporate Presentation – Penn West Petroleum Ltd. – slide 17
    Debt Capital Structure Senior Debt to EBITDA of 2.3 times at September 30, 2013 Credit Syndicate Private Notes (1) 3.0 billion 2.0 billion private notes 20 banks 4.8 years remaining Expires June 30, 2016 6.1% coupon rate Total…
  18. Corporate Presentation – Penn West Petroleum Ltd. – slide 18
    Focus the Portfolio: A&D Strategy Timing Target Proceeds Initial non-core asset disposition Phase 1 - Debt repayment End 2013 - Focusing asset base 1.5 to 2.0B Major portfolio repositioning and focus - Debt repayment Phase 2…
  19. Corporate Presentation – Penn West Petroleum Ltd. – slide 19
    Focus the Portfolio: A&D Strategy Early Success with Phase 1 Non-core; Phase 2 Assets Attractive Phase 1: Expected proceeds of 485MM from non-core asset sales producing 12,500 boe/d (61% oil & liquids) executed Purchase & Sale…
  20. Corporate Presentation – Penn West Petroleum Ltd. – slide 20
    Focus the Portfolio: A&D Strategy Non-core Area Divestment Targets Phase 1: Big Hill Current non-core deals Switchgrass 485MM, 12,500 boe/d Phase 2: 2014 - Cordova - Peace River Oil Partnership - Duvernay Big - Select…
  21. Corporate Presentation – Penn West Petroleum Ltd. – slide 21
    Improve Costs & Netbacks: Operating Costs Project Management Approach toward Attacking Costs Total Operating Costs / Production(1) Top 5 Operating Cost Drivers 1,000 160,000 Total Operating Costs (MM) 150,000 800 Labour…
  22. Corporate Presentation – Penn West Petroleum Ltd. – slide 22
    Improve Costs & Netbacks: Operating Costs Growing the Business in Cost Advantaged / Competitive Areas Company Labour 1.68 New Development Production Other Corporate Unit 3.88 1.12 Lease Rentals 2013(1) 2018(1) Operating…
  23. Corporate Presentation – Penn West Petroleum Ltd. – slide 23
    Improve Costs & Netbacks: G&A Costs Fit for Purpose Support Solutions for the Business Net G&A Costs / Production(1)(2) Top G&A Cost Drivers 160,000 190 Other 150,000 170 Net G&A Costs (MM) Production (boe/d) 140,000 10%…
  24. Corporate Presentation – Penn West Petroleum Ltd. – slide 24
    Oil Growth, Cost Control Lead to Improving Netbacks & Funds Flow Growth 60 50 2018E before Hedging (/boe) Q2 2013 Field Netback 2017E Continued improvement in costs per barrel 2016E 40 2015E 2014E Field netback…
  25. Corporate Presentation – Penn West Petroleum Ltd. – slide 25
    Long-Term Plan Summary Long-Term Plan Robust, Positioned for a Decade of Solid Results Programs are high quality as evidenced by robust metrics - Target 0.7 times PIR, 35% IRR…
  26. Corporate Presentation – Penn West Petroleum Ltd. – slide 26
    Not A Shrink To Grow Strategy Cash Flow Growth With Concurrent Deleveraging Growing Total Cash Flow(1)(2)(3) Improving Profitability(2)(3) 200 2,000 45 100 Annual Average Production(2) 18.7% CAGR(4) 1,500 40 10.6% CAGR(4)…
  27. Corporate Presentation – Penn West Petroleum Ltd. – slide 27
    Penn West Oil Marketing Strategy Actively Hedge Hedge WTI Hedge differentials (Edmonton/WTI) Control Barrels to Refiners Direct market to refiners/end users Selective use of rail Establish strategic, long term, multi-stream supply…
  28. Corporate Presentation – Penn West Petroleum Ltd. – slide 28
    Oil Pipeline Transportation Infrastructure Canada (mmbbls/d) Production 3.2 Refining Cap 1.9 Edmonton Upgrader Cap 1.4 Consumption 1.6 Penn West aims to diversify Crude Exports 2.3 its oil marketing by levering Crude Imports 0.7…
  29. Corporate Presentation – Penn West Petroleum Ltd. – slide 29
    Hedging Strategy Balanced Financial Management 2013 55,000 bbls/d of crude oil collared at WTI US92 x US104 175 mmcf/d of natural gas contracted at an average fixed price of 115 C3.43/mcf for the period between Q3-Q4 2013 110…
  30. Corporate Presentation – Penn West Petroleum Ltd. – slide 30
    Hedging Position Current Balanced Financial Management Oil: 2013 - 55,000 bbls/d Collars (US91.55 x US104.42/bbl) H1/2014 - 20,000 bbls/d Swaps - US93.74/bbl H1/2014 - 10,000 bbls/d Collars - (US93.20/bbl x US101.00/bbl) Gas: H2/2013…
  31. Corporate Presentation – Penn West Petroleum Ltd. – slide 31
    Assets Overview
  32. Corporate Presentation – Penn West Petroleum Ltd. – slide 32
    Cardium Development Profile Gaining Momentum in Canadas Largest Light Oil Resource Operated Development Net Production Adds & Capital(1) Gross Well Count(1) Cumulative Development Production 800 45 350 40 300 35 600…
  33. Corporate Presentation – Penn West Petroleum Ltd. – slide 33
    Cardium Trend Long-Term Development Plan T50 Cardium Capital Program (1) 800 Willesden Green Pembina 600 MM/year J Lease 400 Pembina 200 0 2014 2015 2016 2017 2018 Cardium Production(1) 60,000 Lodgepole…
  34. Corporate Presentation – Penn West Petroleum Ltd. – slide 34
    Cardium Key Attributes(1)(2)(3) Strategic Value & Potential(1)(2)(3) 600,000 net acres Working Interest (%) 65 650 MMboe contingent resource Total PIIP (MMboe) 5,748 Dominant infrastructure position Total Contingent Resources…
  35. Corporate Presentation – Penn West Petroleum Ltd. – slide 35
    Cardium Crimson Lake & Unit 6 Long-Term Development Plan Crimson Lake Type Curve(1) Penn West land 500 PW drilled WGU 9 P10 PW 2013 well 400 PW 2014 well T44 300 Penn West PW long-term well boe/d PW EOR 200 P50 Unit…
  36. Corporate Presentation – Penn West Petroleum Ltd. – slide 36
    Cardium Lodgepole & PCU 9 Long-Term Development Plan Lodgepole Type Curve(1) 300 T48 P10 PCU 9 200 boe/d Penn West P50 100 P90 0 0 12 24 PCU 9 Injection pilot Months Lodgepole Per Well D&C 4 Cost…
  37. Corporate Presentation – Penn West Petroleum Ltd. – slide 37
    Cardium J Lease & Easyford Long-Term Development Plan J Lease Type Curve(1) 300 P10 T50 250 Easyford 200 boe/d 150 100 P50 Penn West 50 P90 0 0 12 24 Months T49 J Lease Per Well D&C 4 Cost Performance(2)(3)…
  38. Corporate Presentation – Penn West Petroleum Ltd. – slide 38
    Viking Development Profile WCSB Leading Economic Returns Prioritized Operated Development Net Production Adds & Capital(1) Gross Well Count(1) Cumulative Development Production 160 10 120 140 9 8 100 120 Well…
  39. Corporate Presentation – Penn West Petroleum Ltd. – slide 39
    Viking Oil Long-Term Development Plan Viking Tier 1 Type Curve 100 Industry Leader in Core Areas(1) R23 R20W3 80 2013 (27 wells) 60 boe/d Penn West Dodsland 40 Tier 1 Type Curve P10 20 P50 P90 0 0 12 24 T32…
  40. Corporate Presentation – Penn West Petroleum Ltd. – slide 40
    Viking Key Attributes(1)(2)(3) 2014 Play Focus & Status(1)(2)(3) Working Interest (%) 92 Industry leader for production results Achieved competitive costs in early Q4 2013 Total Contingent Resources (MMboe) 171 Implement Avon Hills…
  41. Corporate Presentation – Penn West Petroleum Ltd. – slide 41
    Slave Point Development Profile Extensive Light Oil Upside Potential Operated Development Net Production Adds & Capital(1) Gross Well Count(1) 450 16 80 Cumulative Development Production 400 14 70 350 12 60 Well…
  42. Corporate Presentation – Penn West Petroleum Ltd. – slide 42
    Slave Point Long-Term Development Plan Slave Point Capital Program (1) 450 400 Red Earth 350 Sawn Sawn R10W5 R7 300 Otter MM/year 250 200 Penn West land 150 100 PW 3D seismic 50 PW 2013 well 0 PW 2014 well 2014…
  43. Corporate Presentation – Penn West Petroleum Ltd. – slide 43
    Slave Point Key Attributes(1)(2)(3) 2014 Play Focus and Status(1)(2)(3) Low-Risk development drilling Working Interest (%) 95 - Otter 7 wells Total PIIP (MMboe) 2,065 - Sawn 9 wells Total Contingent Resources (MMboe) 114 - Red…
  44. Corporate Presentation – Penn West Petroleum Ltd. – slide 44
    Slave Point Sawn Long-Term Development Plan R13W5 Sawn Type Curve(1) 3D seismic 400 Sawn type curve 3 kms 300 Penn West average Industry average 2 miles boe/d 200 100 0 0 6 12 18 24 30 Months Sawn Lake Per Well…
  45. Corporate Presentation – Penn West Petroleum Ltd. – slide 45
    Slave Point Otter Long-Term Development Plan Otter Type Curve(1) R10W5 250 200 150 boe/d 100 50 0 T88 0 12 24 Months Otter Wells Exceeding Budgeted Volumes(2)(3) 300 Water Flood expansion 250 Cumulative…
  46. Corporate Presentation – Penn West Petroleum Ltd. – slide 46
    Slave Point Red Earth Long-Term Development Plan R8W5 Red Earth Type Curve(1) 3 kms 300 2 miles 200 boe/d 100 0 0 12 24 Months Red Earth is an under-developed reef facies analogous to Sawn 2 appraisal drills…
  47. Corporate Presentation – Penn West Petroleum Ltd. – slide 47
    Waskada Development Profile Five Year Summary Operated Development Net Production Adds & Capital(1) Gross Well Count(1) Cumulative Development Production 80 3.5 50 3.0 40 60 2.5 Well Count/year MM/year…
  48. Corporate Presentation – Penn West Petroleum Ltd. – slide 48
    Waskada Free Cash Flow Generation from Light Oil Development Waskada Type Curve(1) 110 100 R26 R24W1 90 Penn West average 80 Industry average 70 boe/d 60 Penn West 50 40 30 20 10 0 0 12 24 Months Waskada…
  49. Corporate Presentation – Penn West Petroleum Ltd. – slide 49
    Waskada Strategic Value & Potential(1)(2)(3) Key Attributes(1)(2)(3) Cost structure improvement potential Working Interest (%) 90 95 Oil infrastructure and gas plant in place Total PIIP (MMboe) 877 Large Tier 1 inventory 200 wells…
  50. Corporate Presentation – Penn West Petroleum Ltd. – slide 50
    Supplemental Information
  51. Corporate Presentation – Penn West Petroleum Ltd. – slide 51
    Long-Term Plan Pricing Assumptions Maintain the 0.14 quarterly dividend through the plan period Conservative Canadian light oil price assumption of an average of 89/bbl No cash taxes in plan period See Forward-Looking Information…
  52. Corporate Presentation – Penn West Petroleum Ltd. – slide 52
    2014 Budget Funds Flow Sensitivities Change Budget Change WTI Oil (US/bbl) - 10.00 + 10.00 92.50 Funds Flow Impact (CMM) - 123 + 135 Light Differential (US/bbl) - 10.00 + 10.00 - 5.55 Funds Flow Impact (CMM) - 195 + 193 AECO…
  53. Corporate Presentation – Penn West Petroleum Ltd. – slide 53
    Long-Term Plan Target Statistics Target Four Year CAGR (%) Target Five Year CAGR (%) 2015 2018(1) 2014 2018(1) Total Production boe/d 7.3 2.0 boe/share 6.3 1.1 boe/share (debt adjusted)(3) 4.8 4.0 Oil Production bbls/d 12.6 8.4…
  54. Corporate Presentation – Penn West Petroleum Ltd. – slide 54
    Funds Flow & Sustainability WTI Sensitivity Penn Wests internal price deck is consistent with Canadian Bank average Funds Flow(1)(2) Sustainability Ratio(1)(2) 2,000 140% Internal deck Internal deck Canadian Bank average…
  55. Corporate Presentation – Penn West Petroleum Ltd. – slide 55
    2012 Reserves Highlights (1) Proved : 445 mmboe (1) 34% Proved + Probable (2P) : 676 mmboe 50% 16% Liquids account for over 71% of 2P Reserve Category (% of 2P) Replaced approximately 190% of 2012 (2) Proved Producing Proved…
  56. Corporate Presentation – Penn West Petroleum Ltd. – slide 56
    Contingent Resources Major Light Oil Plays Best Estimate of Resources(1)(2) (mboe) Resource Class Cardium(3) Slave Point Viking Waskada Cumulative Production(4) 865,059 30,123 124,166 17,648 Proved plus Probable Reserves(4)…
  57. Corporate Presentation – Penn West Petroleum Ltd. – slide 57
    Definitions and Industry Terms All references to dollar amounts in this presentation are to Canadian dollars unless otherwise specified. A&D means oil and natural gas property acquisitions and divestitures. Boe / share and Boe / share…
  58. Corporate Presentation – Penn West Petroleum Ltd. – slide 58
    Stock Exchange Investor Relations Toronto: PWT Clayton Paradis Manager, Investor Relations New York: PWE Telephone: (403) 539-6343 Email: clayton.paradispennwest.com Legal Counsel Burnet, Duckworth & Palmer LLP Toll Free: 1-888-770-2633…

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