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Analyst & Investor Day – Bonanza Creek Energy, Inc.

Bonanza Creek Energy, Inc. · Apr 11, 2013 · 72 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 1
    Analyst & Investor Day Expanding the Runway April 11, 2013
  2. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 2
    Analyst & Investor Day Agenda Company Overview & Themes Michael Starzer President & CEO Operations Summary Gary Grove EVP Engineering & Planning Wattenberg Field Operations Tony Buchanon VP Rocky Mountain Engineering…
  3. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 3
    Bonanza Creek Overview North Park Basin Market Cap : (1) 1.5 billion (Niobrara) Wattenberg Field (Niobrara & Codell) Enterprise Value(1): 1.7 billion (1P) 0.5 MMBoe(3) 59% Oil Public Float(2): 73% 2012 Production 0.1 MBoe/d (1P)…
  4. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 4
    Analyst & Investor Day Themes Highly visible and top tier growth profile Company forecasted growth predominantly from high return Wattenberg Field Financial capacity to aggressively devote capital to growing production Expanding…
  5. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 5
    Operations Summary Gary Grove EVP Engineering & Planning Significant Accomplishments 2013 Drilling Status YE 2012 Proved Reserves 6
  6. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 6
    Significant Operational Accomplishments Successfully transitioned from vertical to horizontal development in Wattenberg Field Suspended vertical program at a total of 220 producing vertical wells Drilled 36 horizontal wells in 2012;…
  7. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 7
    Actual First Production Tie-Ins Wattenberg Field Mid-Continent Region 25 18 Non-Op Gross Gross Wells Non-Op Net Net Wells Op Gross 16 Op Net 20 14 12 Well Count Well Count 15 10 8 10 6 4 5 2 0 0 1Q12…
  8. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 8
    YE 2012 Proved Reserves Key Metrics(3) 21% Annual Reserve Growth 371% Reserve Replacement 236% Increase in Niobrara B reserves 19% PUD reserves converted into PDP 45% Proved Developed 63% Oil and Liquids 835MM SEC PV-10…
  9. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 9
    Wattenberg Field Operations Tony Buchanon VP Rocky Mountain Engineering Geology Overview Niobrara B Bench Performance Catalyst Well Update Operational Improvements Future Concepts 10
  10. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 10
    Location and Niobrara Overview Wattenberg Field Late Cretaceous: 82-87 million years ago WYOMING COLORADO 12N Approximately 6,000ft in depth 11N Horizontal drilling and multi-stage 10N hydraulic fracturing have improved Oil…
  11. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 11
    Geologic Description of the Niobrara and Codell Latham 14-2 Resistivity Porosity Gamma Ray Niobrara Formation Two Structural Units: Smokey Hill Sharon Springs Chalk and Fort Hays Limestone Coniacian & Santonian Smokey Hill…
  12. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 12
    Location Map Highlighting Wattenberg HZ Wells N LEGEND Vertical Wells HORIZONTAL WELLS BCEI NBL BBG PDCE CRZO MRO ECA CHK SNYDER 13
  13. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 13
    Wattenberg Horizontal Niobrara 2009 & Previous Activity Three Total Horizontal Wells (1% of total wells drilled in 2009) Two short diagonal wells in Wells Ranch & 70 Ranch areas LEGEND Vert…
  14. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 14
    Wattenberg Horizontal Niobrara 2010 Activity 13 Total Horizontal Wells (4% of total wells drilled) Drilled HZ well NE of BCEI Acreage Continued diagonal drilling with several wells in Wells Ranch & 70 Ranch areas LEGEND…
  15. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 15
    Wattenberg Horizontal Niobrara 2011 Activity 67 Total Horizontal Wells (15% of total wells drilled) Drilled a HZ well north of BCEI HZ well NE of BCEI Acreage acreage 5 HZ wells in 70 Ranch & Development mode evidenced by Wells…
  16. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 16
    Wattenberg Horizontal Niobrara 2012 Activity 169 Total Horizontal Wells (49% of total wells drilled) 80- and 40-acre pads testing Niobrara &Codell reporting avg. IP30 of 521 Boe/d Drilled one HZ Well north of BCEI acreage…
  17. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 17
    Wattenberg Horizontal Niobrara 2013 Activity To Date 37 Total Horizontal Wells (93% of total wells drilled) Continued drilling 80-acre pad developments Multiple long reach laterals Two HZ Wells N of BCEI including 8 on 80-acre…
  18. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 18
    BCEI Acreage Correlation to Wells Ranch Niobrara A Bench Thinner and resistivity less developed A Niobrara B Bench Similar thickness and resistivity A Niobrara C Bench Slightly thinner lower chalk bench; similar resistivity…
  19. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 19
    Niobrara B Bench Production Profiles BCEI Niobrara B Bench wells at time zero 20
  20. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 20
    Performance Improvement BCEI Reported Average IP30 Rates Technical Improvements 510 40 500 35 Increased frac stages from 16 to 18 490 30 Increases reservoir wellbore communication 480 25 Wellcount Controlled flowback…
  21. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 21
    Niobrara B Target Type Well Economics ROR Sensitivity to Oil Price(1) Type Well Economics EUR (MBoe) 313 Crude Oil 62% Reference Price Capital Investment (MM) 4.2 NPV10 (MM) 4.2 ROR 64% Payout (Years) 1.5 Target 313 MBoe Type…
  22. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 22
    2012 Catalyst Well Performance Tested Codell, C Bench and Extended Reach Lateral Wells with Positive Results(1) 10,000 1,000 Boe/d 100 10 0 20 40 60 80 100 120 140 160 180 200 220 240 Days (2) 313 MBOE B Target Curve…
  23. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 23
    Extended Reach Laterals BENEFITS Additional 1,200 feet Lateral Length Minimizes Environmental Impact Reaches Below Inaccessible Surface Areas Cost and Operational Efficiencies Additional lateral in payzone Frac Port Average…
  24. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 24
    Operational Improvements Original Procedure STEP 1: Drill and Complete Well STEP 2: Clean out with coil tubing STEP 3: Commence flowback and production STEP 4: Produce well until it ceases to flow naturally STEP 5: Install tubing…
  25. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 25
    Operational Improvements Updated Procedure STEP 1: Drill and Complete Well STEP 2: Clean out with coil tubing STEP 3: Install tubing and gas lift valves STEP 4: Commence flowback and production STEP 5: Turn on gas lift when…
  26. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 26
    ns Operational Improvements 27 Early wellbore cleanout 2 days of delayed production Higher flow-back pressure Prevents leads to more efficient post- frac cleanout 10-12 days of delayed production Early installation of production…
  27. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 27
    IP Reporting State Data vs. Company Data Methodology to determine accurate assessment of reservoir deliverability BCEI uses daily production data; state uses monthly production data BCEI excludes early flowback back time period…
  28. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 28
    IP Calculation Methodology New operational methods reduce number of days to determine reported IP rates X Indicates excluded days due to early flowback or operational downtime 1,000 Current reporting time Original reporting time…
  29. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 29
    Drilling Improvements Time (Days) 2011 2012 2013 Spud to Spud 15.4 15.2 13.5 Spud to Rig Release 13.9 12.4 6,000,000 16 Stages 18 Stages 2013 Guidance 5,000,000 4.2 MM 4,000,000 3,000,000 2,000,000 1,000,000 0 1 2 3 4…
  30. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 30
    Status of 2013 Drilling Program 2013 Permit Status 2013 Budgeted Drilling Program 14 Producing Wells Per Month Non-Op Gross Non Op Net 12 Op Gross Op Net 10 22 8 11 6 4 20 2 0 19 Apr-13 Aug-13 Sep-13…
  31. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 31
    Continuous Improvement Integrated Gathering System Centralized Production Facility Stacked Drilling With Wells In Multiple Zones Drill Multiple Wells On One Pad Drill Single B Bench Well On A Single Well Pad 32
  32. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 32
    Future Optimization 5280 Concepts to Test(1) Spacing Alternate 80 acre vs. 40 acre in Niobrara B & C Bench 5280 80 acre vs. 160 acre in Codell Stacked B & Codell Operational Efficiencies Drill all wells on one pad or one…
  33. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 33
    Current Plan for Future Development 5280 Tied to 3P Assessment 36 Total Wells Per Section: 16 B Bench on 40 acre spacing 16 C Bench on 40 acre spacing 5280 4 Codell on 160 acre spacing Four 9-well Drilling Pads Two…
  34. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 34
    Mid-Continent Operations John Larson VP Mid-Continent Region Mid-Continent Region Overview Well Life Cycle Dorcheat-Macedonia Type Curve Gas plant expansion 35
  35. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 35
    Mid-Continent Region Overview ERA SYSTEM SERIES GROUP FORMATION Repeatable, low risk infill drilling and recompletions CENOZOIC EOCENE Claiborne PALEOCENE Wilcox Provides free cash flow TERTIARY Midway CRETACEOUS GULFIAN Navarro…
  36. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 36
    Cotton Valley Lenticular Oil Sands Pin-Point Fracture Technology Focused completion technology Improved recovery of OOIP Highly repeatable Dorcheat Unit 37 25-30 sand/shale sequences Each zone individually pressured Potential…
  37. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 37
    Mid-Continent Region Well Life Cycle Drill vertically to 8,800 Log and obtain pressure measurements for individual sands. Analyze with in-house petrophysical model Recompleted Fracture stimulate with 4-8 small, Zones pin-point…
  38. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 38
    (1) Dorcheat-Macedonia Field Type Curve (Boe/d) 120 Type Curve(2) Recompletions open additional Cotton Valley oil pay zones up-hole 148,000 Boe EUR 100 Initial 30-day rate: 67 Boe/d Peak 30-day rate: 103 Boe/d 80 Includes…
  39. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 39
    Plant Capacity Addition Completed 12.5 MMcf/d expansion of Dorcheat gas plant 40
  40. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 40
    2013 Q1 Operations Summary Drilled Wells 12 Completed Wells 13 Recompletions 26 9 wells at Dorcheat (10 acres) 7 wells at Dorcheat (10 acre) Cotton Valley pay-adds 1 well at Dorcheat (5 acres) 3 wells at Dorcheat (5 acres) 3 wells at…
  41. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 41
    2013 Budgeted Development Plan Drill 36 Wells 30 Dorcheat Unit 10 acre 3 Dorcheat Macedonia 5 acre 3 McKamie Patton Complete 39 Wells 30 wells at Dorcheat (10 acre) 6 wells at Dorcheat (5-acre)(1) 3 wells at McKamie Patton…
  42. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 42
    Wattenberg & Mid-Continent 3P Reserves Lynn Boone SVP Reservoir Engineering Wattenberg Field Acreage delineated for horizontal Niobrara B Detailed geologic analysis Positive early results for horizontal Niobrara C and Codell…
  43. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 43
    Niobrara Acreage & EUR Estimates Niobrara B Bench 3P Assessment Present across entire acreage position 3P assessment includes locations on 32,080 gross acres EURs for unproved locations evaluated at YE2012 SEC PUD recovery levels…
  44. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 44
    Codell Acreage & EUR Estimates Codell EUR 3P Assessment Present across entire acreage position 3P assessments includes locations on 15,400 gross acres Risked reserve estimate of 230 MBoe/well Based on most conservative B Bench…
  45. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 45
    3P Evaluation: Niobrara and Codell Development Development Plan Employed Spacing: 40-acre for Niobrara B and C 160-acre for Codell Well design: Standard 4,000 ft. laterals Pad development Up to 36 wells per section based on…
  46. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 46
    BCEI Acreage Correlation to Wells Ranch Niobrara A Bench Thinner and resistivity less developed A Niobrara B Bench Similar thickness and resistivity A Niobrara C Bench Slightly thinner lower Chalk Bench; similar resistivity…
  47. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 47
    Niobrara/Codell Complex: OOIP & Potential Recovery OOIP 58-74 MMBoe/section Preliminary BCEI core analysis Section 2 of 4N63W 58 MMBoe/section NBL Wells Ranch area 74 MMBoe/section(1) Estimates include all intervals from…
  48. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 48
    Wattenberg 3P Reserves & Location Inventory 247 MMBoe Net 3P Reserves Proved Reserves 60% crude oil / 40% wet gas 32 MMBoe 32 MMBoe booked at YE2012 13 MMBoe PD 19 MMBoe PUD 107 MMBoe 108 MMBoe 215 MMBoe unbooked at YE2012…
  49. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 49
    Wattenberg Horizontal Location Inventory Drilling Inventory 3P Reserves YE 2010 YE 2011 YE 2012 Risked EUR Target EUR Gross Net Gross Net PUD Niobrara B Bench - 26 25 75 68 Unproved Niobrara B Bench - 114 98 647 490 269 313…
  50. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 50
    Wattenberg Conceptual 5 Year Development Producing Locations Planned Drilling Development Inventory 36 operated horizontal Niobrara 740 gross (621 net) locations 1,527 total gross (1,151 net) B wells drilled and producing drilled by…
  51. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 51
    Wattenberg Conceptual 5 Year Production 60 Increasing to 8 rigs by 2017 50 40+ MBoe/d 40 MBoe/d 20+ 30 20 15+ 10 0 2013 2014 2015 2016 2017 PDP PUD Niobrara B Niobrara C/Codell 52
  52. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 52
    Wattenberg 3P Summary Strong Foundation Acreage delineated for horizontal Niobrara B Bench Detailed geologic analysis Positive early results for horizontal Niobrara C Bench and Codell Abundant Opportunity Significant location…
  53. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 53
    Dorcheat Macedonia 3P Introduction Solid Base Low-risk 10-acre development 100% ownership of gas processing facilities Positive early results from the first 5-acre pilot test Potential Upside 5-acre development nearly doubles…
  54. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 54
    Current Development of Dorcheat Macedonia Cotton Valley PUD Drilling Program EURs of 148 MBoe at 90/Bbl WTI 2009: 4 wells 120 gross (98 net) 10-acre locations identified 2010: 13 wells Estimated 13% recovery of OOIP 2011: 40 wells…
  55. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 55
    Geologic Model & Recoveries Geologic Model Supports 5-Acre Downspacing Potential Volumetric analysis 20-acre recovery estimated at 7% 10-acre recovery estimated at 13% 5-acre recovery estimated to…
  56. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 56
    5-Acre Pilots & 3P Development Cotton Valley 5-Acre Pilots 3P Development Pilot 1 3 wells Pilot 2 3 wells Up to 15 wells per 80 acres Spud late in 2012 Wells currently drilling Capex accounts for two pay-add First production in Feb.…
  57. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 57
    Dorcheat Macedonia 3P Reserves & Locations 36 MMBoe Net 3P Reserves 45% crude oil / 20% NGLs / 35% dry gas 19 MMBoe booked at YE2012 8.7 MMBoe PD 10.3 MMBoe PUD (all 10-acre) 17 MMBoe unbooked at YE2012 19 17 MMBoe MMBoe…
  58. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 58
    Dorcheat Macedonia Well Economics Type Well Economics 10-acre 5-acre Economic Parameters Number of Locations 120 219 Capex: 1.8 MM EUR 148 MBoe 118 Mboe Liquids: 65% NGL Yield (Bbl/MMcf)(1) 43 43 Gas Shrink: 41% NPV10 (MM) 1.8…
  59. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 59
    Initial 5-Acre Pilot Well Performance Encouraging Early Results from Pilot 1 Production rates Initial rate Expected: 59 Boe/d (based on 118 MBoe EUR) Actual: 72 Boe/d 30-day average Expected: 57 Boe/d (based on 118 MBoe EUR)…
  60. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 60
    Dorcheat Macedonia 3P Summary Solid Base Low-risk 10-acre development 100% ownership of gas processing facilities Positive early results from the first 5-acre pilot test Upside with 5-acre Success 5-acre development nearly…
  61. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 61
    Financial Overview Ryan Zorn VP Finance Simplicity & Transparency = Successful Outcomes Balanced approach to capital allocation Protect & promote strong cash margins Maintain peer-leading balance sheet strength 62
  62. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 62
    2013 Capex Plan Wattenberg Activity Doubles 2013 Capex: 394 million 63 Wattenberg Field: 324 million Niobrara B (4,000): 56 wells Niobrara B (9,000): 2 wells Niobrara B (40-acre test): 6 wells Niobrara C: 4 wells Codell: 4 wells…
  63. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 63
    Improving Operating Cost Structure High Margins Unit Cash Operating Costs (/Boe) Unit Revenue & Cash Margins (/Boe) 30 80 70 25 5.71 60 76.68 3.49 66.93 20 3.43 50 65.70 67.43 8.19 3.90 15 40 9.12 7.76 6.75 30 10 50.74…
  64. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 64
    Current Hedge Positions 6,000 Bbl/d hedged at a minimum price of 88.45/Bbl in 2013 4,200 Bbl/d hedged at a minimum prices of 87.34/Bbl in 2014 Less than 2% gas production hedged in 2013 Oil Swaps Oil Collars Gas Swaps (Bbls/d) (/Bbl)…
  65. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 65
    Balance Sheet Structure 66 Recent high yield offering(1) Inaugural issue for BCEI 8 year term Yield of 6.75% sets new record for single B, first-time E&P issuers Upsized from 250 million to 300 million Borrowing base Reduced to…
  66. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 66
    Conservatively Capitalized vs B Rated Peers Net Debt / LQA EBITDAX(1) LQA EBITDAX / LQA Interest Expense(1) 67 5.0x 20.0x 18.6x 4.4x 4.5x 18.0x 4.0x 16.0x 3.6x 3.5x 14.0x 3.1x 3.0x 12.0x 10.7x 2.5x 2.5x 2.5x 2.2x 10.0x 2.0x 8.0x…
  67. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 67
    Conservatively Capitalized vs B Rated Peers Net Debt / Proved Reserves (/Boe)(1) Net Debt / PD Reserves (/Boe)(1) 68 12.00 11.36 30.00 10.60 24.96 10.00 25.00 8.00 7.61 20.00 18.43 7.15 15.74 6.00 15.00 13.95 4.77 12.18 3.93…
  68. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 68
    Balance Sheet Strategy Liquidity profile Current liquidity exceeds 300 million(1) Combined with organic cash flow yields annual funding capacity in excess of 550 million(2) Balance sheet governors Target annual funding capacity…
  69. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 69
    Financial Summary Simplicity & Transparency = Successful Outcomes 70 Balanced approach to capital allocation Fund oily growth with oily cash flow and prudent balance sheet use Maintain block & tackle growth in the Mid-Continent with…
  70. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 70
    Appendix 71
  71. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 71
    Niobrara B Target Type Well Economics Target 313 MBoe Type Curve 600 30-day Avg: 458 boepd 550 60-day Avg: 400 boepd 90-day Avg: 355 boepd 500 450 400 350 Boe/d 300 250 200 150 100 50 0 0 12 24 36 48 60 Months…
  72. Analyst & Investor Day – Bonanza Creek Energy, Inc. – slide 72
    Niobrara B Target Type Well Economics Target 313 MBoe Type Curve 80% 75% 70% 65% % Oil 60% 55% 30-day Avg: 76% 60-day Avg: 74% 50% 90-day Avg: 73% 45% 40% 0 12 24 36 48 60 Months 73

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