Investor Presentation January 2013
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Investor Presentation January 2013 Grizzly Oil Sands Forward-Looking Statements Certain statements, estimates and financial information contained in this presentation ("Estimates") constitute forward- looking statements or information. Such forward-looking statements or information involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from the Estimates or results implied or expressed in such forward-looking statements. While presented with numerical specificity, the Estimates are based (i) on certain assumptions that are inherently subject to significant business, economic, regulatory, environmental, seasonal, and competitive uncertainties, contingencies and risks including, without limitation, assumptions of resource, ability to obtain debt and equity financing, capital costs, construction costs, well production performances, operating costs, commodity pricing, differentials, royalty structures, regulatory approvals, and other known and unknown risks, all of which are difficult to predict and many of which are beyond the control of Grizzly Oil Sands ULC ("Grizzly"); and (ii) upon assumptions with respect to future business decisions that are subject to change. There can be no assurance that the Estimates or the underlying assumptions will be realized and that actual results of operations or future events will not be materially different from the Estimates. Under no circumstances should the inclusion of the Estimates be regarded as a representation, undertaking, warranty or prediction by Grizzly, or any other person with respect to the accuracy thereof or the accuracy of the underlying assumptions, or that Grizzly will achieve or is likely to achieve any particular results. The Estimates are made as of the date of this presentation and Grizzly disclaims any intent or obligation to update publicly or to revise any of the Estimates, whether as a result of new information, future events or otherwise. Recipients are cautioned that forward-looking statements or information are not guarantees of future performance and, accordingly, recipients are expressly cautioned not to put undue reliance on forward-looking statements or information due to the inherent uncertainty therein. There are significant differences in the criteria associated with the classification of reserves, prospective resources and contingent resources. Contingent resources and prospective resources estimates involve additional risks, specifically the risk of not achieving commerciality and exploration risk, respectively, not applicable to reserves estimates. No adjustments for these risks have been made in the groupings of reserves and recoverable resources. All reference to dollars in this presentation should be assumed to refer to Canadian dollars, unless otherwise noted. All references to reserves and or resources represent Grizzly’s interest in reserves and resources prior to the deduction of Crown royalties, unless otherwise noted. Grizzly Oil Sands 2 Investment Highlights • > 800,000 net acres in the Athabasca and Peace River oil sands regions (100% One of the Largest operated, nearly 100% WI) focused on SAGD development Oil Sands Land • > 3.2 billion bbls of Contingent Resources (1) across 32 project areas Positions in Alberta • Significant exploration and exploitation technology upside potential • Plans to bring on 150,000 bbls/d of bitumen production over the next decade • Algar Lake Phase 1 is currently in the final stages of construction with first Well Defined production expected in Q3 2013. Regulatory approvals are in place for Phase 2 Growth Plan with Near-Term • A 25 well delineation drilling program is currently underway at May River, with Production plans to file a 12,000 bbls/d Phase 1 development application by the end of 2013 • At Thickwood, a 12,000 bbls/d development application was filed in December 2012 Advanced, • Grizzly’s unique “ARMS” development model to extract bitumen enables Relocatable, repeatable and scalable project development, reducing execution and financing Modularized, risk Standardized • Modular facilities can be easily moved and re-used to reduce costs over time and (“ARMS”) have a 50% smaller footprint than a typical SAGD facility Development Model • Substantially fewer field construction hours reduce construction costs and risk 1. Source: GLJ Petroleum Consultants Ltd., as at December 31, 2011; May River resource estimate by GLJ Petroleum Consultants Ltd., as at March 1, 2012. Grizzly Oil Sands 3 Investment Highlights (Cont’d) • Grizzly expects to obtain consistent access to premium markets by shipping its production by rail to the U.S. Gulf Coast oil refining market Rail Transportation Strategy • Grizzly expects to yield higher, and less volatile netbacks per barrel of bitumen over the long-term compared to traditional trucking and pipeline alternatives that deliver to sales points within Alberta Highly Experienced • Executive experience at leading SAGD projects including: Jackfish (Devon), Management Team Surmont (Conoco), Cold Lake (Imperial Oil), Hangingstone (JACOS), MacKay with Significant Oil River, Dover UTF and Meadow Creek (Suncor) Sands Project • Each member of Grizzly's management team has ~30 years of experience in all Expertise phases of oil sands exploration and development • Private oil sands company founded in 2006, owned by Wexford Capital LP and Gulfport Energy Corporation Financial Strength and Flexibility • Currently no debt. A $125 million undrawn bank revolver provides additional flexibility going forward Grizzly Oil Sands 4 2012 Accomplishments Algar Lake • Launched construction of the Algar Lake Phase 1 project • Commissioning is scheduled to commence in Q1 2013 • Acquired the May River property in Q1 2012 for $225 million May River increasing Grizzly’s contingent resource by one-third • Commenced a 25 delineation well drilling program in Q4 2012 Thickwood • Completed delineation drilling and seismic programs in Q1 2012 and filed a 12,000 bbls/d development application in Q4 2012 Rail • Initiated rail marketing strategy to ensure consistent access to Strategy premium markets • Arranged $125 million bank borrowing facility, to provide additional Financing funding flexibility going forward Grizzly Oil Sands 5 Development Portfolio Poised for Value Growth In-fill Project Development Project Execution and Reservoir Validation Regulatory Approval and Project Algar Lake Engineering and Phase 1 Construction May River Increasing Value ($/bbl)($/bbl) Value Value Increasing Increasing Land Acquisition & Resource Delineation Thickwood Advancement of Resource Development Resource Project Project Project Repeatability Capture Development Start Up Execution Grizzly OilCurrently Sands in the Early Stages of Sustainable Value Creation 6 800,000+ Net Acres of Alberta Oil Sands Leases Grizzly Oil Sands Lease Asphalt Other Oil Sands Lease Creek Alberta Oil Sands Areas Producing Thermal Project Firebag McClelland Lake River Under Construction Thermal Project Ells North Liege-Harper Sunshine ––– Silvertip Suncor ––– West Ells Firebag Ells Central West Ells Husky/BP ––– & South Sunrise AOC –––Dover West (Pilot(Pilot)))) Dover Suncor ––– MacKay River Southern Pacific ––– North Star- McKay Nina Fishery Loon Birchwood Creek Prairie Thickwood Hills PetroChina ––– City of MacKay Fort McMurray Driftwood Lake Athabasca Rapids Horse Cadotte Saleski River Athabasca ---Hangingstone West Saleski Shell –––Peace River Muskwa East Nexen / CNOOC –––Long Lake Laricina ––– Black Baytex –––Seal Slave Germain Laricina ––– JACOS –––-–---Hangingstone Saleski (Pilot(Pilot) ))) Bear Algar JACOS / Nexen ––– Hangingstone City of Lake COP/Total –––Surmont Peace River Riverside Connacher –––Algar Connacher –––Pod One House Kodiak Statoil/PTTEP --- CenovusCenovus/COP/COP –––Narrows Lake Leismer MEG ––– Christina Lake BlackPearl –––Blackrod KNOC BlackGold (Pilot) May River BlackGold Cenovus/COP Christina Lake Devon ---Jackfish CNRL ---Kirby Cherpeta Cenovus /COP ––– Foster Creek = 1 township (6 miles x 6 miles) Grizzly Oil Sands 7 Grizzly Assets Grizzly has a high quality resource based on Steam Assisted Gravity Drainage (“SAGD”) with additional upside using other reservoir recovery processes • 3.2 billion barrels of 2P Reserves + Contingent Resources (1) • Resources primarily located in low risk “clastic” reservoirs, with some exposure to the carbonates Two thirds of current lease position remains unexplored, which provides upside potential 2P Reserves Bitumen Potential (1) Proved Contingent + Initially in 2P Reserves Plateau Reserves Resources Contingent Place (mmbbls) Production (mmbbls) (mmbbls) Resources (mmbbls) (bbls/d) (mmbbls) Clastics (Existing Technologies) (1) (2) Under Construction Projects Algar Lake 504 67 114 35 149 20,000 Near-Term Development Projects May River 1,800 0 0 824 824 90,000 Thickwood 2,396 0 0 107 107 12,000 Other Projects Additional Growth Properties 14,907 0 0 1,923 1,923 209,000 Total Existing Technologies 19,607 67 114 2,889 3,003 331,000 Carbonates (Technology under Development) (1) Additional Growth Properties 6,509 0 0 199 199 24,000 TOTAL 26,116 67 114 3,088 3,202 355,000 1. Source: GLJ Petroleum Consultants Ltd., as at December 31, 2011; May River resource estimate by GLJ Petroleum Consultants Ltd., as at March 1, 2012. Grizzly Oil Sands 8 Rapidly Growing Production Profile Grizzly plans to build and operate 25 ARMS plant cores at five different project areas with ~154,000 bbls/d of bitumen production over the next decade Additional properties