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CORPORATE PRESENTATION – Penn West Petroleum Ltd.

Penn West Petroleum Ltd. · Sep 1, 2014 · 42 slides

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Slides

  1. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 1
    Corporate Presentation September 2014
  2. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 2
    Corporate Summary Listing TSX: PWT NYSE: PWE Market Capitalization(1) 3.9 billion Big Hill Shares Outstanding(2) 495 million Liquidity(3) TSX: 2.4 million NYSE: 2.3 million 2014 Production Forecast(4) 101 - 106 mboe/d (66% liquids)…
  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 resources Focused Portfolio Target Best-in-Basin Operator Status Reliable Production Performance…
  4. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 4
    Penn Wests Strategic Direction Not Impacted Focused On Value Added Liquids Growth & Funds Flow Growth Annual Average Production(2) Funds Flow(1)(2)(3) 150 2,000 No Change 125 7.3% CAGR(4)(5) 1,500 Original LTP mboe/d Total…
  5. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 5
    Q2/14 Highlights Funds Flow for Q2 was 298MM (0.61/share - basic) Net Debt of 2.4B at quarter-end was reduced by 269MM compared to Q1/14 Operating cost of 15.20/boe was lower than expected: Result of cost reduction efforts which…
  6. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 6
    Operated Development Activity Spent 45MM in the quarter on Operated Development activity, including 40MM in the three core plays Drilled 10 net, completed 12 net and brought 12.5 net wells on production Kicked off H2/14 development…
  7. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 7
    Q2/14 Financial & Operating Bridges Q2 production growth(1) of 5,900 boe/d outpaced decline of 5,300 boe/d Adjusted for A&D, Q2/14 production was higher than in Q1/14 Q2 Funds Flow(2) of 298MM vs Q1 Funds Flow of 269MM Decreased…
  8. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 8
    Q1/14 Q2/14 Net Debt Bridge 3,000 2,750 2,655 (69) Net Debt (MM) 2,500 302 54 7 1 2,386 65 (29) 152 2,250 221 (298) 230 2,000 2,132 2,004 1,750 Q1/14 Unrealized Funds Capital Enviro Net Dividends…
  9. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 9
    Quarterly Cash Costs Trending Down 600 Demonstrating success in cost reduction efforts 500 Quarterly Cash Cost (MM) 400 G&A (net) Environmental 300 Workovers Royalties 200 Transportation 100 Operating…
  10. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 10
    Building a Strong Foundation We continued to streamline our business and improve our processes in the second quarter Penn West has reduced its headcount by almost 50 percent since our high mark in late 2012 Together with dramatic…
  11. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 11
    Current Long-term Plan
  12. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 12
    Play Performance Metrics Gross Well Count Over 95% of development capital is allocated in 500 these three core areas through the long-term plan 400 Slave Point Program D&C costs have reduced significantly Viking since 2012 and we…
  13. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 13
    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…
  14. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 14
    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 50,000…
  15. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 15
    Cardium Key Attributes(1)(2)(3) Strategic Value & Potential(1)(2)(3) 600,000 net acres Working Interest (%) 65 650 MMboe contingent resources Booked Reserves (MMboe 2P YE 2013) 161 Dominant infrastructure position EUR Factor (%)…
  16. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 16
    Cardium Crimson Lake & Unit 6 Long-Term Development Plan Crimson Lake Type Curve(1)(2)(3) Penn West land PW drilled 500 WGU 9 Penn West plan type curve PW 2013 well 400 PW 2014 well T44 PW long-term well boe/d 300 PW EOR…
  17. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 17
    Cardium Lodgepole & PCU 9 Long-Term Development Plan Lodgepole Type Curve(1)(2)(3) 300 T48 Penn West plan type curve PCU 9 200 boe/d 100 0 0 12 24 PCU 9 Injection pilot Months Lodgepole Per Well D&C 4 Cost…
  18. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 18
    Cardium J Lease & Easyford Long-Term Development Plan J Lease Type Curve(1)(2)(3) 300 T50 250 Penn West plan type curve Easyford 200 boe/d 150 100 50 0 0 12 24 Months T49 J Lease Per Well D&C 4 Cost…
  19. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 19
    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…
  20. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 20
    Viking Oil Long-Term Development Plan Viking Oil Hz Production Comparison in Greater Dodsland(1)(2)(3) 70 R23 R20W3 60 Penn West plan type curve 50 bbls/d 40 30 20 10 0 0 12 24 T32 Months Viking Production(2)…
  21. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 21
    Viking Oil 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 Booked Reserves (MMboe 2P YE 2013) 31 Implement Avon…
  22. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 22
    Viking Oil Penn West Outperforming Peers 80 70 Average IP30 rate (bbls/d) 60 Penn West 50 40 30 20 2 3 4 5 6 7 8 9 10 11 Average 6 month Cumulative Oil Production(1) (Mbbl) Source: TD Securities West…
  23. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 23
    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…
  24. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 24
    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 2015…
  25. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 25
    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 Booked Reserves (MMboe 2P YE 2013) 40 - Sawn 9 wells EUR Factor (%) 14 26 - Red Earth 2…
  26. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 26
    Slave Point Sawn Long-Term Development Plan R13W5 Sawn Type Curve(1)(2) 3D seismic 400 Sawn type curve 3 kms 300 Penn West plan type curve 2 miles boe/d 200 100 0 0 6 12 18 24 30 Months Sawn Lake Per Well D&C…
  27. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 27
    Slave Point Otter Long-Term Development Plan 250 Otter Type Curve(1)(2) R10W5 200 Penn West plan type curve 150 boe/d 100 50 0 0 12 24 T88 Months Water Flood expansion Successfully drilled and completed our…
  28. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 28
    Slave Point Red Earth Long-Term Development Plan R8W5 Red Earth Type Curve(1)(2) 3 kms 300 2 miles Penn West plan type curve 200 boe/d 100 0 0 12 24 Months Red Earth is an under-developed reef facies analogous…
  29. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 29
    Supplemental Information
  30. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 30
    Price Realizations by Product Oil NGLs Natural Gas Q2 2014 Q1 2014 Q2 2014 Q1 2014 Q2 2014 Q1 2014 /bbl /bbl /bbl /bbl /mcf /mcf WTI or Henry Hub Benchmark US 102.99 98.62 102.99 98.62 4.67 4.94 Benchmark Differential US (6.23)…
  31. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 31
    Hedging Position Current Balanced Financial Management Gas: 2014 - 90,000 mcf/d Swaps - 3.90/mcf 2014 - 50,000 mcf/d Collars - (3.41/mcf x 4.17/mcf) 2015 - 70,000 mcf/d Collars - (3.69/mcf x 4.52/mcf) Power: 2014 - 80 MWh 58.50/MWh…
  32. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 32
    2013 Reserves Highlights Proved(1): 415 MMboe High Quality Reserves Proved + Probable (2P)(1): 625 MMboe 72% Proved Developed Liquids account for approximately 70% of 2P reserves Producing Proved Reserves 415 MMboe Excluding impact…
  33. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 33
    Light Oil Plan Resource Conversion Key Plays Light Oil Cardium 1,400 900 Prospective 800 Resources 1,200 Prospective Resources 700 Remaining Remaining 1,000 Resource 600 Resource (post long-term (post long-term Contingent 800…
  34. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 34
    Details of Accounting Practices Reviewed The Review determined that the following matters required adjustment: Certain expenses reclassified as PP&E from operating expenses without adequate support and certain PP&E incorrectly…
  35. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 35
    Impacts on Key Financial Metrics The review identified several accounting practices that required restatement adjustments. The impacts of these adjustments on key financial metrics of the Company are summarized in the following…
  36. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 36
    Actions Taken as a Result of the Review We are in the process of enhancing our internal control testing function and believe that increasing organizational awareness and understanding of the importance of internal controls will…
  37. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 37
    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…
  38. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 38
    2014 Budget Funds Flow Sensitivities Incorporating Current Hedge Positions 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…
  39. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 39
    Key Changes 2013 Reconciliation No Change in Cash Position Pre- Post - Restatement Restatement (1) Revenue 2,827 101MM previously 2,829 Royalties (507) Royalties now Opex (406) Operating Costs (853) (1,025) Transportation (29)…
  40. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 40
    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. API means, in relation to…
  41. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 41
    Non-GAAP Measures Advisory In this presentation, we refer to certain financial measures that are not determined in accordance with International Financial Reporting Standards (Canadian GAAP). These measures as presented do not have any…
  42. CORPORATE PRESENTATION – Penn West Petroleum Ltd. – slide 42
    Stock Exchange Investor Relations Toronto: PWT Clayton Paradis Manager, Investor Relations New York: PWE Telephone: (403) 539-6343 Email: clayton.paradispennwest.com Independent Reserves Evaluator Sproule Associates Limited Toll Free:…

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