Upload
others
View
2
Download
0
Embed Size (px)
Citation preview
DELIVERING GROWTH OSUM OIL SANDS CORP. | AGM PRESENTATION | MAY 7, 2019
Osum Oil Sands Corp. 2
Forward Looking Statements
This presentation contains statements that may constitute "forward-looking statements” within the meaning of applicable securities legislation. These
statements include, among others, statements regarding business strategy, beliefs, plans, goals, objectives, assumptions or statements about future
events or performance. By their nature, forward looking statements are subject to numerous risks and uncertainties, some of which are beyond
the Company's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations,
environmental risks, competition from other industry participants, lack of availability of qualified personnel or management, stock market volatility and
ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such
information, although considered reasonable at the time of preparation, may prove to be incorrect and, as such, undue reliance should not be placed on
forward-looking statements. Actual results, performance or achievement could differ materially from those expressed in, or implied by any forward
looking statements in this presentation, and accordingly, no assurance can be given that any of the events anticipated by the forward-looking
statements will transpire or occur, or if any of them do so, what benefits the Company will derive therefrom.
The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise.
Reserves and Resources
Except where noted to be from another source, the reserve estimates herein were extracted from reports prepared by GLJ Petroleum Consultants Ltd.
(GLJ), an independent professional petroleum engineering firm, in accordance with definitions, standards and procedures contained in the Canadian Oil
and Gas Evaluation Handbook (COGEH), with the exception that data pursuant to the Curtailment Rules not available as at December 31, 2018 was
considered when estimating allowable bitumen production for 2019 in the evaluation of reserves and resources estimates at December 31, 2018.
Reserves are classified according to the degree of certainty associated with the estimates. Proved reserves are those reserves which can be estimated
with a high degree of certainty to be recoverable. It is 90 percent likely that actual remaining quantities will exceed estimated proved reserves. Probable
reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities
recovered will be greater or less than the sum of proved plus probable reserves. Possible reserves are those additional reserves that are less certain to
be recovered than probable reserves. Other criteria that must also be met for the categorization of reserves are provided in the COGEH.
The preparation of an evaluation requires the use of judgement in applying the standards and definitions contained in the COGEH. As the Company’s
independent reserve evaluator, GLJ applies those standards and definitions based on its experience and knowledge of industry practice. However,
because the application of the standards and definitions contained in the COGEH requires the use of judgement there is no assurance that governing
securities regulator(s) will not take a different view than GLJ as to some of the determinations in an evaluation.
Presentation of Financial Information
Unless otherwise stated, all figures presented are in Canadian Dollars.
Disclaimer
Osum Oil Sands Corp. 3
• Private company focused on
building a robust oil business
• Established production and
cash flow base in the Cold
Lake region of Alberta
• Near-term focus at the Orion
SAGD project – pursuing
further facility debottlenecking,
cost savings and staged
growth opportunities
• Additional organic growth
opportunities include the Taiga
SAGD project in the Cold Lake
region and extensive holdings
in the Grosmont carbonates
• Led by an experienced
management team and Board
of Directors
Corporate Overview
Osum Oil Sands Corp. 4
2018: A Transformative Year
Successful Completion of
Orion Expansion Project
Achieved Record
Production Levels
• Orion Phase 2BC expansion completed on schedule and under budget
• Doubled production potential at Orion to 18,000 bbl/d
• Average annual production at Orion increased by 37% to 11,082 bbl/d
• Average Q4 2018 production of 15,424 bbl/d was well ahead of a target exit rate of 14,000 bbl/d and on track to demonstrate productive capacity in excess of 18,000 bbl/d in 2019
• Strong liquidity position with working capital of $60 million(1) at year end
• Further facility debottlenecking and staged growth opportunities at Orion will be timed to be funded from cash flow
• The Taiga Project, an approved greenfield development, is next in the development queue
• Proved reserves increased by 20% to 141.6 Mbbl compared to 2017
• Lowered unit operating costs and further reduced overhead costs
• In addition to record production levels, steam injection increased by 21% year over year
• An effective and methodical commodity hedging program coupled with an improved cost structure from a higher production base allowed Osum to navigate challenging market conditions, especially in Q4 2018.
Well Positioned
for the Future
Navigated Challenging
Market Environment
Delivered Strong
Operating Results
1 Excludes net unrealized hedging asset and deferred consideration and includes restricted cash.
Osum Oil Sands Corp. 5
Phase 2A
• Completed in Q3 2017
• 3rd boiler
• 3 SAGD well pairs
• Crystallizer
Phase 2BC
• 4th boiler
• 18 SAGD well pairs and
surface facilities
• 2 produced water
evaporators
• Significant CPF expansion
• 635,000 Manhours directly
related to project execution
A Closer Look: Orion Growth Projects
2014
2018
Osum Oil Sands Corp. 6
View from the Field
Osum Oil Sands Corp. 7
Production increased 37%
• The significant production ramp up
was due to full year contributions
from the three Phase 2A well pairs
added in Q4 2017 and early
contributions from the Phase 2BC
well pairs brought on stream in the
second half of 2018
• Thirteen of 18 Phase 2BC well pairs
had been converted to SAGD by
year end
Steam injection increased 21%
• The increase in steam reflects the
impact of an additional boiler and
two evaporators that were part of
Phase 2BC.
Record Production and Steam
-
2,000
4,000
6,000
8,000
10,000
12,000
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
Ste
am
In
jecti
on
(T
/day)
Bit
um
en
Pro
du
cti
on
(b
bl/d
ay)
Phase 1/2A Phase 2BC Steam Injection
Osum Oil Sands Corp. 8
In response to prices in Q4, Osum took
additional actions:
• Voluntarily curtailed production volumes
in November and December to limit the
impacts of pipeline apportionment
• Restricted planned Q4 2018 and 2019
capital spending to sustaining capital
• Increased 1H 2019 hedging targets and
expanded the program to included
condensate and natural gas
• Maintained focus on minimizing operating
expenses
2018 Commodity Price Environment
$(20)
$(10)
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100Netback after Hedging C$/bblField Netback C$/bblWTI US$/bbl
On December 2, 2018, in an effort to address the excess
supply that led to the very wide price differential, the
Government of Alberta announced a curtailment of oil
production in the Province for up to 12 months beginning
January 2019.
GOVERNMENT RESPONSE
Since mid-2015, Osum has systematically and rateably hedged a portion of our WTI and WTI-WCS exposure to
reduce cash flow volatility.
Osum Oil Sands Corp. 9
Operating Results
2018 2017 Change %
Bitumen Production bbl/d 11,082 8,100 2,982 37%
WTI US$/bbl 64.78 50.85 13.93 27%
Cold Lake Blend US$/bbl 37.57 38.20 -0.63 -2%
Differential US$/bbl 27.21 12.65 14.56 115%
Differential % 42% 25%
Foreign Exchange Rate US$/C$ 0.79 0.77
AECO Gas Price $/mcf 1.46 2.04 -0.58 -28%
Bitumen Field Price $/bbl 25.81 39.43 -13.62 -35%
Royalties $/bbl 2.67 1.43 1.24 87%
Operating Costs $/bbl 13.08 18.03 -4.95 -27%
Field Netback Before Hedging $/bbl 10.06 19.97 -9.91 -50%
Realized Gains (Losses) on Risk Management $/bbl 1.97 (2.68) 4.65 -174%
Cash Operating Netback After Hedging $/bbl 12.03 17.29 -5.26 -30%
Field Netback Before Hedging $MM 40.7 59.1 -18.4 -31%
Realized Hedging Gains (Losses) $MM 8.0 (7.9) 15.9 201%
Cash Operating Netback After Hedging $MM 48.7 51.2 -2.5 -5%
Osum Oil Sands Corp. 10
Balance Sheet
31 Dec 2018 31 Dec 2017
Cash and Cash Equivalents (1) $ MM 66.6 230.5
Working Capital Surplus (1)(2) $ MM 60.0 213.2
Long Term Debt Outstanding (3) $ MM 271.4 252.8
Basic Shares Outstanding MM 131.0 131.0
Includes restricted cash of $13.9 MM
Excludes the current portions of net unrealized hedging assets and liabilities and deferred consideration
Consists of the outstanding non-current portion of the US$ term loan translated to C$ at the period-end exchange rate. The
current portion is accounted for in the working capital surplus
Osum Oil Sands Corp. 11
Reserves
31 Dec 2018(1) 31 Dec 2017(2) %
Reserves (MMbbls)
Proved Reserves 142 118 20%
Proved + Probable Reserves 542 537 1%
Present Value Before Tax 10% ($MM)
Proved Reserves $1,572 $957 64%
Proved + Probable Reserves $2,815 $1,890 49%
1. GLJ Petroleum Consultants as at December 31, 2018. See “Reserves and Resources” Disclaimer on page 2.
2. GLJ Petroleum Consultants as at December 31, 2017. See “Reserves and Resources” Disclaimer on page 2.
Osum Oil Sands Corp.
Safety and Environmental Performance
12
Safety
• Significantly
reduced Total
Recordable Injury
Frequency (TRIF)
from 0.943 in 2017
to 0.511 in 2018
• Osum employees
and contractors
achieved two million
hours without a lost
time incident
Water
• No fresh water for
used for steam
generation
• Produced water
recycle rate has been
nearly 90% for the
last three years
Air
• In 2018, there was an
11% reduction in
greenhouse gas
intensity over 2017
• Overall, 26%
reduction from
original facility
baseline GHG
intensity (2010
versus 2018)
Land
• Phase 2ABC wells
were drilled from
existing Phase 1 well
pads resulting in a
74% reduction in
surface disturbance
compared to the
original Phase 2
design
Osum Oil Sands Corp.
Community
13
Community
• Since 2009, actively
engaged with
stakeholders including
government,
community groups and
Indigenous groups
• Well-established
community investment
program supports
initiatives targeting
education, promoting
student interest in
science and innovation
and sport
• Committed to creating
jobs and supporting
businesses in the
community
Osum Oil Sands Corp.
The Future: 2019 and Beyond
Osum Oil Sands Corp. 15
• Scoping and planning activities for further expansion of the Orion facility are in progress.
• Phase 2D scope includes: debottlenecking of the existing facility and the installation of facilities and equipment
to support additional well pairs and lower drainage wells (producer wells drilled between and below existing well
pairs).
• The execution of the individual components will be timed to allow them to be funded from cash flow and will be
subject to visibility of curtailment being lifted.
Orion Expansion Opportunities: Phase 2D
5th Boiler
2nd Waste Water
Treatment
Heat Integration
Osum Oil Sands Corp. 16
Cold Lake Growth Plan
0
10,000
20,000
30,000
40,000
50,000
60,000
Oil R
ate
(b
bls
/d)
Orion: Current Production
Orion: Optimization / Phase 2D
Taiga: Phase 1
Taiga: Phase 2
Taiga: Phase 3 • Clear path for staged, self-funded growth to
~60,000 bbls/d
• 100% Osum owned and operated
Timing Cash Flow Cash on Hand Debt Equity
Maintenance Capital Ongoing
Corporate G&A and Debt Service Ongoing
Orion Optimization Ongoing
Orion Expansion Phase 2D 2019/2020
Taiga (Phase 1) 2021+ TBD TBD TBD TBD
Osum Oil Sands Corp. 17
• Maintain focus on safety and environmental performance
• Deliver profitable production while continuing to reduce structural costs
• Continue to deliver on Phase 2BC performance within the confines of curtailment
• Prepare for next growth steps
• Manage our finances prudently
2019 Priorities
Osum Oil Sands Corp. 18
Summary
2018 was a transformative year:
• Delivered strong operational performance
while successfully completing Orion
Phase 2BC expansion project on
schedule and under budget
• Exited the year with an average Q4
production of 15,424 bbl/d, well ahead of
target exit rate of 14,000 bbl/d
• Materially reduced per barrel operating
costs, driving cash flow sustainability
• Maintained an active risk management
program to decrease cash flow volatility
and enhance cash flow predictability
• Positioned the Company for future growth
with a significant portfolio of opportunities
Osum Oil Sands Corp. 19
Board of Directors
Name / Title Relevant Prior Experience
William A. Friley
Chairman
• Independent Businessman
• President and Chief Executive Officer of Telluride Oil and Gas and President of Skyeland Oils
• Director of Obsidian Energy and Advanced Flow Technologies
Angelo Acconcia • Senior Managing Director, Blackstone Capital Partners and Blackstone Energy Partners
• Director of Beacon Oil & Gas, Brix & Harvest, Gavilan Resources, Guidon Energy, Huntley &
Huntley, Jetta Energy Permian, Primexx, LLOG, Royal Resources, and Vine Oil & Gas
Roy Ben-Dor • Principal, Warburg Pincus LLC
• Director of Black Swan Energy, Artis Exploration and Zenith Energy
Vincent Chahley • Independent Businessman
• Director of Venturion Oil, Velvet Energy, and Aequitas Innovations
• Former Managing Director of Corporate Finance at FirstEnergy Capital
George Crookshank • Independent Businessman
• Director of Advanced Flow Technologies
• Former Vice President of Finance and Chief Financial Officer of OPTI Canada Inc. (2002 to
2007)
Jun Hyung (John) Lee • Principal, Blackstone Capital Partners and Blackstone Energy Partners
• Director of Huntley and Huntley, Utility One Source GP LLP and Gavilan Resources LLP
Francesco Mele • Partner, Azimuth Capital Management
• Director of Timber Rock Energy, Cequence Energy, and Altex Energy
Brian Reinsborough • Independent Businessman
• Founder and CEO of Novara Energy LLC
• Founder, former President and CEO of Venari Resources
Steve Spence • President & CEO of Osum
Osum Oil Sands Corp.
Osum Oil Sands Corp.
1900, 255 – 5th Avenue SW
Calgary, Alberta T2P 3G6
T. 403 283 3224 F. 403.283.3970
Facebook.com/osumcorp
osumcorp.com