ATHABASCA OIL CORPORATION FOCUSED | EXECUTING | DELIVERING ANNUAL GENERAL MEETING – MAY 7, 2020
ATHABASCA - PREMIER RESOURCE EXPOSURE LIGHT OIL ~40,000 boe/d* THERMAL OIL MONTNEY ~90% liquids ~$450MM EV $352MM Liquidity HANGINGSTONE 95 year 2P RLI 1,300 MMboe 2P 455 MMboe Proved LIGHT OIL CORNER DUVERNAY LEISMER * Productive capacity: ~20,000 bbl/d Leismer, ~10,000 bbl/d Hangingstone, ~10,000 boe/d Light Oil 1 ATHABASCA OIL (TSX:ATH) Footnotes and additional information included in the back as endnotes
Q1 2020 HIGHLIGHTS ~36,600 boe/d $1.1MM Operating Income 91% liquids Negatively impacted by COVID‐19 driven price volatility Operating Netbacks $352MM liquidity $54MM Capex (net) $17/boe Light Oil Pro Forma Upsized Royalty 35% Thermal / 65% Light Oil ‐$8.25/bbl Leismer 2 ATHABASCA OIL (TSX:ATH) Footnotes and additional information included in the back as endnotes
THE TRANSFORMATION $486MM $400MM $265MM Light Oil JV Contingent Infrastructure FCF Generation COVID19 with Bitumen Sale Murphy Oil Royalty Disciplined Manage Resource Operations Business Appraisal 2020 2020 2016 2017 2018 2019 Momentum Strong Balance Funding Sheet Maintain not Secured Strong Future Growth $560MM $70MM Liquidity Projects Leismer Contingent Acquisition Bitumen Royalty from Equinor OPERATING NETBACKS PRODUCTION $26/boe $21/bbl $20/bbl $14/boe ‐$17/bbl ‐$5/bbl 3 ATHABASCA OIL (TSX:ATH) *Corporate netback excludes hedging
BUSINESS ENVIRONMENT & COVID19 IMPACT SUPPLY/DEMAND BALANCE (MBBL/D) COVID19 IMPACT o WHO declared COVID19 a pandemic in March o Resulted in a material disruption to global economy OIL PRICE IMPACT o Estimated oil demand impact of 22.5 mmbbl/d (Goldman Sachs Investment Research) o OPEC+ has agreed to cut 10 mmbbl/d o Shut‐ins have occurred globally in non‐OPEC+ countries EASING GLOBAL INVENTORY BUILDS (MMBBL) o Inventories close to capacity CANADIAN PIPELINES UNDER CONSTRUCTION o Keystone XL – Government of Alberta backed • AOC capacity of 10,000 bbl/d o Trans Mountain Expansion – Government of Canada owned • AOC capacity of 20,000 bbl/d 4 ATHABASCA OIL (TSX:ATH)
RESPONSE TO COVID-19 ACTIONS TAKEN Ensured the Safety of Staff Maintained Strong Maximized and Contractors Funds Flow Corporate Liquidity • Halted capital program • Hangingstone shut‐in • Enacted Business Continuity Plan ($40MM reduction) • Voluntary curtailments at • Developed site specific plans with • Upsized Contingent Bitumen Leismer and Placid Alberta Health guidelines Royalty ($70MM cash) • Reduced 2020 opex ($15MM) • Transitioned Calgary staff to • Reduced future KXL service working remotely • G&A optimization ($6MM) • Strong Q2‐Q4 hedge book RESULTS TO DATE MANAGED BUSINESS SOLIDIFIED SAFETY AND MOMENTUM BALANCE SHEET SECURITY OF SITES Defer PDP for stronger prices $352MM liquidity AOC continues to advance liquidity enhancing opportunities and cost savings initiatives 5 ATHABASCA OIL (TSX:ATH) Footnotes and additional information included in the back as endnotes
CONTINGENT BITUMEN ROYALTY $70MM UPSIZED ROYALTY SLIDING SCALE ROYALTY o Upsized Royalty only applies to the Hangingstone, Leismer, Corner & US$ WCS Leismer and Corner Hangingstone <$60 0.0% o Total cash proceeds of $467MM $60 2.5% $80 8.8% ROYALTY OVERVIEW >$100 15.0% o US$ Western Canadian Select benchmark trigger o Royalty scale between 0 – 15% SLIDING SCALE STRUCTURE • US$60 WCS initial 2.5% trigger (equivalent to US$72.50 WTI with a US$12.50 WCS diff) 15% o Applied to the realized bitumen price net of 12% transportation and storage FUTURE EXPANSION PHASES & PROJECTS 9% o Limited impact on future project returns 6% o No commitments to future development phases 3% Leismer, Hangingstone, Corner Dover West, Birch, Grosmont o Higher pricing threshold on greenfield assets 0% $50 $75 $100 $125 $150 $175 WCS (US$/bbl) 6 ATHABASCA OIL (TSX:ATH)
THERMAL OIL – LEISMER LEISMER DEVELOPMENT LEISMER – TOP TIER OIL SANDS PROJECT o ~20,000 bbl/d production; 40,000 bbl/d AER approval PAD 8N PAD 8N PAD 8S PAD 8S o 695 mmbbl 2P reserves; 95 year 2P RLI PAD 6 PAD 6 CPF CPF o Recently placed L7 sustaining pad on production (Q4/19) PAD 6 PAD 6 o ~US$23 WCS operating break‐even PAD 4PAD 3 PAD 4 PAD 3 (US$35 WTI and US$12.50 WCS diff) PAD 1 PAD 1 PAD 2 PAD 2 TEMPORARILY CURTAILING VOLUMES PAD 7 PAD 7 Existing Surface Pads o Focused on maintaining reservoir integrity High : 40 Existing Drainage Areas Pad L7 o Flexibility to reduce volumes down to ~8,000 bbl/d Pad L8N Low : 10 Pad L8S o Continuing steam and NCG injection LEISMER PRODUCTION HISTORY o Water Disposal in place to manage volumes and reduce opex 25,000 4.4x 4.2x o Duration will be dictated by pricing 20,000 4.0x FUTURE DEVELOPMENT POST PRICING RECOVERY 15,000 3.8x SOR (x) bbll/d 3.6x 10,000 o L6 infills and L7 edge well pairs 3.4x o L8 sustaining pad 5,000 3.2x 0 3.0x Jan‐18 Jul‐18 Jan‐19 Jul‐19 Jan‐20 Pads 1‐6 Pad 7 SOR 7 ATHABASCA OIL (TSX:ATH)
THERMAL OIL – HANGINGSTONE HANGINGSTONE DEVELOPMENT HANGINGSTONE PROJECT o ~9,500 bbl/d productive capacity; ~4.5x SOR o 177 mmbbl 2P reserves; 55 year 2P RLI o ~US$31 WCS operating break‐even (US$44 WTI and US$12.50 WCS diff) SUSPENDED OPERATIONS o Facilities laid up for extended suspension o Mature reservoir with 5 years of steam injection GREENFIRE HANGINGSTONE PILOT SHUT‐IN o Resumption of production will be dictated by long term pricing outlook 10,000 30 Oil Rate Producers Online 30 25 8,000 MONTHS 20 ANALOG RESERVOIRS 6,000 Well Count bbl/d 15 o Analog reservoirs show positive results after 4,000 10 prolonged shut in periods (i.e. JACOS/Greenfire 2,000 Hangingstone Pilot) 5 0 0 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 8 ATHABASCA OIL (TSX:ATH)
PLACID MONTNEY PLACID ACTIVITY 16‐30 Pad 6 wells HIGHLIGHTS – OPERATED 70%WI 2‐5 Pad 4 wells o Productive capacity ~8,500 boe/d net o 80,000 gross prospective acres o 200 well development inventory o 200 – 300 bbl/mmcf initial free liquids o $22/boe 2019 operating netback Wells ATH Montney Spud in Past Year Spud +1 Year RECENT ACTIVITY PLACID WELL RESULTS o 10 new development wells placed on production and cleaned‐up through April o Curtailing to base production May/June (~3,500 boe/d) o Temporarily deferring new wells until improved pricing o Suspended capital activity for remainder of 2020 Footnotes and additional information included in the back as endnotes 9 ATHABASCA OIL (TSX:ATH)
KAYBOB DUVERNAY KAYBOB DUVERNAY KAYBOB NORTH DUVERNAY HIGHLIGHTS KAYBOB EAST o Significant resource exposure (~220,000 acres) SIMONETTE o ~700 remaining locations across the play KAYBOB WEST o Strong condensate yields (200 – 1,000 bbl/mmcf) SAXON TWO CREEKS o Q1/20 production of ~4,250 boe/d (72% liquids) o $30/boe 2019 operating netback Volatile Oil Window Gas Condensate Window Industry Duvernay Hz Wells ATH Duvernay Hz Wells RECENT PAD RESULTS 06‐06‐65‐17 2,500 JOINT VENTURE HIGHLIGHTS (30% WI) KAYBOB 09‐03‐65‐18 15‐23‐64‐17 EAST ~88% Average Liquid Yield 16‐27‐64‐17 2,000 o $ 1B gross initial investment; $75MM net to retain 07‐15‐64‐17 TWO 04‐21‐64‐16 30% working interest 05‐19‐64‐15 CREEKS* 1,500 16‐29‐64‐16 o 2020 budget: 8 drills, 13 completions, 16 tie‐ins boe/d AOC Volatile Oil Type Curve 1,000 o ~90% of land is held following the 2020 budget o All significant capital activity for 2020 is complete 500 0 0 10 20 30 40 50 60 70 80 90 100 Days * Two Creeks rates are wellhead gathered oil (no gas) 10 ATHABASCA OIL (TSX:ATH) Footnotes and additional information included in the back as endnotes
CORPORATE RESPONSIBILITY CORPORATE EMISSIONS INTENSITY GLOBAL EMISSIONS 0.07 Intensity (tonnes CO2e/boe) 0.06 0.05 2019 0.04 0.03 0.02 2015 2016 2017 2018 2019 THERMAL WATER RECYCLING (2019) LIABILITY MANAGEMENT RATING 95% 95% of Thermal Oil reservoir water recycled for steam generation 90% Recycle Rates 85% Higher LMR = Alberta Liability Management Stronger Rating 80% Rating (LMR) 16.0 75% 70% Oil sands mining In Situ Enhanced oil Athabasca recovery Thermal Oil 11 11 ATHABASCA OIL (TSX:ATH) Sources: National Pollutant Release Inventory, Alberta Directive 54 filings, ARC Energy Research Institute, Alberta Energy Regulator.
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