Penn West in 2015 2015 Production Guidance Trading Information 95,000 - 105,000 boe/d Listing TSX:PWT NYSE: PWE Share Price (as of Nov 26) C4.91 US4.37 Shares Outstanding 497.3MM 497.3MM Natural Gas Market Capitalization C2,442MM…
Significant Progress in First Year of Plan Measure Outlook Details 2014 average production expected above mid-point of Average Production ON TARGET guidance range of 101,000 106,000 boe/d Opex run rate down 200MM on an annualized…
Delivering On Targets Results starting to be reflected in reporting; Change taking hold Production on Track to Meet 2014 Guidance Net Debt Expected to Decrease by 1B Drill Times Decreased Significantly 110 25 22 109 3,500…
Penn West Value Proposition
Value Proposition Key pillars of the Long-Term Plan remain unchanged Continue to improve leverage through non-core dispositions Debt View current debt levels as manageable within a sustained annual Reduction average C75/bbl Light…
Debt Reduction: Leverage Perspective Committed to reaching target of 1.0 - 1.5x Net Debt / Funds Flow Additional non-productive divestitures viewed as the most appropriate method to reach target in the near term Current and original…
Debt Reduction: Internal Levers Optionality remains should prices soften for a sustained period Penn West controls 90% of capital spending in 2015 Mitigating levers available should prices fall to various levels Capital…
Debt Reduction: A&D Levers Penn West seeks to reduce debt by a further 0.5 - 1.0B, primarily associated with non-productive dispositions Remain confident that efforts to market Duvernay as well as other non-productive interests…
Profitable Growth: Key Metrics of the Plan Strategy remains unchanged; Production and Funds Flow CAGRs have improved over the last year on same price deck Average Annual Production Funds Flow 150 2,500 8% CAGR 20% CAGR 130…
Profitable Growth: Value to Shareholders Dividend impact is meaningful for potential shareholder returns Funds Flow Per Share Penn West views paying a 6 Funds Flow Per Share sustainable dividend as a Funds Flow Per Share 5…
Profitable Growth: High-Grading the Portfolio 2015E Production 2019E Production By Play 40% from By Play 65% from Delivering on the Plan Core Areas Core Areas Spending 90% of capital on Cardium 3 core plays, including 55%…
Execution and Cost Control Operating expense reduction and production reliability drive value from the base 95% Production reliability is a low cost 94% Targeting reliability opportunity to add barrels Production Reliability…
2015 Capital Budget & Long-Term Plan Update
2015 Budget: Next Step in Delivery 2015 continues to focus on oil development, particularly in the three core plays 2015 plan implies 3 - 8% annual average Total Capital 840MM production growth over 2014, adjusting for major…
Updated Long-Term Plan Overview Strong execution to date on the original Long-Term Plan Updated Long-Term Plan generally offers more value on key metrics, although leverage in 2015 expected to be higher as non-productive…
Development Profile Cardium remains the key development play with 3.3B invested over the next 5 years Represents 55% of investment spend, including full EOR integration Vikings strong economics combined with short cycle times…
Total Production Profile The Long-Term Plan envisions production from the core areas roughly doubling Other assets decline modestly and provide free cash flow to drive growth in our core plays Total Production Profile by Area…
Funds Flow, Sustainability and Leverage Updated Long-Term Plan (LTP) shows Funds Flow meaningful improvement of Sustainability Ratios 2016 forward 2,500 Funds Flow 100% or below post 2015 2,000 Funds Flow Original LTP Approach…
Long-Term Plan Production Profile Penn West expects meaningful seasonality to its production profile as a result of breakup on longer cycle-time projects at Cardium and Slave Point Throughout the Plan, growth expected to be most…
Potential Impacts of Macro Volatility Analysis suggests that the revised Long-Term Plan is fairly resilient to commodity price and exchange rate volatility; sale of non-producing assets remains key near-term leverage driver Assumes…
2015 Budget Flexibility Management has thoroughly reviewed the 2015E Net Debt Illustration 2015 Budget in the context of current and Debt Levels potentially lower commodity prices Low High 2014E Year End Net Debt (MM) 2,400…
Valuation
Illustrative Valuation Comparisons Reserves Basis Currently trading at 120% of PDP value, 90% of Share Price as a Percent of 1P Value 1P value and 60% of 2P value 400% Prices as at Nov. 12, 2014 PWT Basis for analysis is YE2013…
Illustrative Valuation Comparisons Multiples Basis Penn West is currently trading at 4.5x EV / DACF and 45,000/boe/d based on recent Scotiabank GBM estimates The oil weighted peer group average (peers whose 2015E production is less…
Waterflood
Waterflood Initiatives Enhancing value through Waterflood Forecasted Percentage of Production Under Active Waterflood 2014E 2015E 2019E Number of active vertical injectors (gross wells) 900 900 900 Number of active horizontal…
Waterflood Program in Detail Integrated waterflood development is Illustrative Waterflood Impact Crimson Cardium expected to increase total value by Integrated decreasing declines and increasing Primary Waterflood volumes recovered…
Effect of Integrated Waterflood Program Integrated waterflood development required moderates declines Penn Wests current decline is top quartile and creates a meaningful competitive advantage by reducing capital required to maintain…
Core Play Overviews
Current Play Life Cycle Company Focus on Development and Harvest Position & Prove Initial Full Harvest Deplete PWTs expertise is developing and Commerciality Development Development or Exit harvesting light oil resources C C C…
Cardium Overview Cardium Play Details T50 Role in Portfolio Core Development Play Locations 2,500 - 3,500 Base Decline (%) 17 - 19 J Lease Land (net sections) 975 Pembina 2015E Production (boe/d) 25,300 2015E Liquids…
Cardium Long-Term Plan Overview Operated Development Capital Operated Development Production Development Production (mboe/d) 1,000 60 50 Capital per Year (MM) 800 40 600 30 400 20 200 10 0 0 2015 2016 2017 2018…
Cardium Activity Initial phase of waterflood development has successfully demonstrated positive oil response and reduced gas-oil ratios (GORs) Recent waterflood success includes one 8-well pad in Willesden Green with 4 horizontal…
Willesden Green Cardium Willesden Green offers some of the best Willesden Green 2 Well Pattern Illustrative Economics economics available in the Cardium Inputs Meets internal hurdle rates below D/C/E/T Cost Per Well Pair (MM) 8.0…
Pembina Cardium Large contiguous land base in one of the Pembina 2 Well Pattern Illustrative Economics largest conventional oil plays in the WCSB Inputs Approximately 722 sections in this area D/C/E/T Cost Per Well Pair (MM)…
Viking Overview R23 R20W3 Viking Play Details Role in Portfolio Core Development Play Provide Free Cash Flow Locations 1,000 - 1,500 T32 Base Decline (%) 28 - 30 Land (net sections) 135 2015E Production (boe/d) 9,100 2015E…
Viking Long-Term Plan Overview Operated Development Capital Operated Development Production 150 7 Development Production (mboe/d) 6 Capital per Year (MM) 5 100 4 3 50 2 1 0 0 2015 2016 2017 2018 2019 2015 2016…
Viking Activity Viking Primary Well Illustrative Economics Viking economics are among the best Inputs within the portfolio D/C/E/T Cost (MM) 1.1 Low royalty rates and opex lead to Production Liquids (bbl) Gas (boe) Total (boe) EUR…
Viking EOR Activity Waterflood is being implemented in western portion of the play, where the majority of planned Hz development has already been R23 R20W3 completed Current recovery to date is approximately 10% Anticipate…
Slave Point Overview Slave Point Play Details Sawn R10W5 R7 Role in Portfolio Emerging Core Development Play Locations 400 - 750 Penn West land Base Decline (%) 34 - 36 PW 3D seismic PW 2014 well Land (net sections) 460 PW…
Slave Point Long-Term Plan Overview Operated Development Capital Operated Net Production Adds Development Production (mboe/d) 350 18 16 300 Capital per Year (MM) 14 250 12 200 10 150 8 6 100 4 50 2 0 0 2015 2016…
Slave Point Activity Otter Horizontal Flood Slave Point is in various stages of development offering significant light oil resource Realized strong netbacks from high quality light oil R10W5 (38o API) Well positioned in play with…
Sawn Slave Point Believe that strong netbacks, driven by high Sawn 2 Well Pattern Illustrative Economics oil weighting, will support attractive project Inputs economics D/C/E/T Cost Per Well Pair (MM) Target D/C/E/T Cost Per Well…
Otter Slave Point Otter 2 Well Pattern Illustrative Economics Otter currently at a more advanced stage of Inputs development than Sawn D/C/E/T Cost Per Well Pair (MM) 13.9 Target D/C/E/T Cost Per Well Pair (MM) 12.8 Well costs…
Appendix
Commodity Price Assumptions 2015 2016 2017 2018 2019 Oil Prices WTI Oil Price US/bbl 87.50 87.50 87.50 89.25 89.25 Ed Par Oil Price C/bbl 86.45 88.20 88.20 91.84 91.84 WTI To Ed Par Differential US/bbl (4.37) (3.50) (3.50) (1.79)…
Current Hedging Position Approximately 40% of 2015 natural gas production hedged between 3.69 - 4.52/mcf Approximately 70% of 2015 power consumption hedged at 55.59/MWh Approximately 20% of 2016 power consumption hedged at…
2013 Reserves Highlights Proved: 415 mmboe High Quality Reserves Proved + Probable (2P): 625 mmboe 72% Proved Developed Liquids account for approximately 70% of 2P reserves Producing Proved Reserves 415 mmboe Excluding impact of…
Debt Capital Structure Senior Debt to EBITDA of 2.0 times at September 30, 2014 Credit Syndicate Private Notes 1.7B capacity CAD2.1B private notes 0.5B expires June 30, 2016 3.9 years average remaining 1.2B expires May 6, 2019…
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