Solid results, significant upside · include, among others, statements regarding business strategy,...
Transcript of Solid results, significant upside · include, among others, statements regarding business strategy,...
Solid results, significant upside
Metropolitan Centre, Calgary
May 4, 2017
Osum Oil Sands Corp.
Annual General Meeting
Disclaimer
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 Canadian Securities Administrators’ National Instrument 51-101 (NI 51-101) and the
Canadian Oil and Gas Evaluation Handbook (COGEH). Under NI 51-101, 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. There is only a 10 percent
probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
The preparation of an evaluation requires the use of judgement in applying the standards and definitions contained in COGEH and NI 51-101. 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 COGEH and NI 51-101 require 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.
Solid results, significant upside
2016 Corporate Highlights Safety
& Environment
Operations
&
Production
Growth
&
Development
Orion Phase 2A
Execution
Solid Financial
Position(1)
1 As at December 31, 2016 2 Excludes net unrealized hedging liabilities. Includes $100 million from proceeds of callable warrants, received in February 2017.
Cold Lake: A cut above in quality
Results: Orion production
0
1,500
3,000
4,500
6,000
0
2,500
5,000
7,500
10,000
Ste
am
In
jectio
n (
T/d
)
Bitu
me
n P
rod
uctio
n (
bb
l/d
ay)
Bitumen production Steam injection
Results: Netbacks
Responsible management
in a low price environment
Orion Operating Results Change Change - %
Bitumen Production (1) bbl/d 7,256 7,736 -480 -6%
WTI US$/bbl 43.37 48.76 -5.39 -11%
Cold Lake Blend US$/bbl 28.61 33.84 -5.23 -15%
Differential US$/bbl 14.76 14.92 -0.16 -1%
Differential % 34% 31% 11%
Foreign Exchange Rate US$/C$ 0.75 0.78 -4%
AECO Gas Price $/mcf 2.25 2.68 -0.43 -16%
Bitumen Field Price $/bbl 29.17 34.61 -5.44 -16%
Royalties $/bbl 0.46 0.69 -0.23 -33%
Operating Costs $/bbl 18.59 18.18 0.41 2%
Field Netback Before Hedging $/bbl 10.12 15.74 -5.62 -36%
Realized Hedging Gains $/bbl 5.55 6.10 -0.55 -9%
Cash Operating Netback After Hedging $/bbl 15.67 21.84 -6.17 -28%
Field Netback Before Hedging $MM 26.9 44.4 -17.5 -39%
Realized Hedging Gains (2) $MM 14.7 17.2 -2.5 -15%
Cash Operating Netback After Hedging $MM 41.6 61.7 -20.1 -33%
Balance Sheet
Reserves
1. GLJ Petroleum Consultants as at December 31, 2016. See “Reserves and Resources” Disclaimer on page 2.
Orion Plus: Team commencing
installation of additional boiler
August 2, 2016
Cold Lake, Alberta
Moving forward: Orion expansion Phase 2A
• The Orion Phase 2A expansion project is currently underway
• Steam capacity was expanded by 15% at year end with the addition of a third boiler and
associated water treatment equipment
• We are in the middle of installing a crystallizer unit that will decrease evaporator blowdown
water disposal and reduce operating costs. It will be operational in Q4 2017
• Three sustaining SAGD well pairs will be drilled in H1 2017
• The program is projected to add 1,000-1,500 bbl per day of bitumen production
Next expansions: Shovel ready, path to 20,000 bbls/day
• Regulatory approval to expand Orion to 20,000 bbls/day
• The next expansion stage, Phase 2B, could be
sanctioned late 2017 adding ~3,000 bbl per day of
bitumen capacity once fully ramped up
• Project scope includes a third evaporator tower, several
smaller pieces of equipment, and 6-8 initial SAGD well
pairs drilled from existing pads
• Additional expansion stages will follow
Growth strategy
Carbonate Core:
Grosmont C
Significant upside: The carbonates
Future capital requirements
2017 Priorities
• Maintain focus on safety and environmental performance
• Deliver profitable production while reducing structural costs
• Complete the Orion Phase 2A expansion and deliver the associated increased
steam injection, bitumen production, and unit cost reductions
• Pursue subsequent small smart production enhancement projects with Phase
2B sanction potentially in late 2017
• Preserve future growth options at low cost
• Manage our finances prudently
Summary
• 2016 was a challenging year characterized by low and volatile oil prices
• Osum delivered increasing production, the best ever steam performance, and
maintained a strong balance sheet
• We created solid opportunities and invested in growth
• Our priorities for 2017 are to further optimize Orion production and costs,
deliver on our growth projects, while maintaining a strong financial position
• The company is well-positioned for near and long term growth with a significant
portfolio of opportunities
Board of Directors
Thank You.