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Investor UpdateJune 2010
This presentation is for information purposes only and is not intended to, and should not be construed to, constitute an offer to sell or the solicitation of an offer to buy securities of Penn West.
Discovered Petroleum Initially‐In‐Place (DPIIP) is equivalent to Original Oil In Place (OOIP). DPIIP, also known as a "discovered resource", is defined as that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered petroleum initially‐in‐place includes production, reserves and contingent resources; the remainder is unrecoverable. A recovery project cannot be defined for this volume of discovered petroleum initially‐in‐place at this time. There is no certainty that it will be commercially viable to produce any portion of the resources.
Certain information regarding Penn West Energy Trust and the transactions reviewed in this presentation including management’s assessment of future plans and operations, may constitute forward‐looking statements under applicable securities law and necessarily involve risks, including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions and ability to access sufficient capital from internal and external sources; failure to obtain required regulatory approvals. As a consequence, actual results may differ materially from those anticipated in the forward‐looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Penn West’s operations or financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), or at Penn West’s website (www.pennwest.com).
This presentation and its contents should not be construed, under any circumstances, as investment, tax or legal advice. Any person accepting delivery of this presentation acknowledges the need to conduct their own thorough investigation into Penn West before considering any investment in its securities. Furthermore, the forward‐looking statements contained in this presentation are made as of the date of this presentation, Penn West does not undertake any obligation to update publicly or to revise any of the included forward‐looking statements, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities law.
Where reserves or production are stated on a barrel of oil equivalent (BOE) basis, natural gas volumes have been converted to a barrel of oil equivalent (BOE) at a ratio of six thousand cubic feet of natural gas to one barrel of oil. This conversion ratio is based upon an energy equivalent conversion method primarily applicable at the burner tip and does not represent value equivalence at the wellhead. BOEs may be misleading, particularly if used in isolation.
This presentation may contain references to non‐GAAP terms. Penn West uses these measures to help evaluate their respective performance. These measures as presented do not have any standardized meaning prescribed by Canadian GAAP and therefore, they may not be comparable with calculations of similar measures for other companies or trusts.
All references are to Canadian Dollars unless otherwise specified.
Advisory
2
3
YieldGrowth
Setting the Course for the Future
4
• Capital budget of $700 to $800 million necessary to maintain current production levels
• Focus funds to increase pace of development in key play areas – anticipate $150 to $200 million for organic growth
• Timing for conversion at year-end 2010
• Set dividend with objective to remain within funds flow for sustaining capital, growth capital and dividend
• Fine tune model for 2011 and provide guidance for capital plans during Q4 2010
Conversion
5
producer of light & medium oil in western Canada
#
6
Significant Light Oil PotentialSignificant Light Oil Potentialmillion acres
7
AdvantageInfrastructure
Oil Gas BOEProved 341 mmbbls 938 bcf 497 mmboe
Proved and Probable 472 mmbbls 1,292 bcf 687 mmboe
8
%Proved OilReserves
VerticallyBooked
95%
Strategic Portfolio Management
9
Peace RiverOil Sands
Wildboy
Eastern Alberta
Penn West land position
Cardium
WaskadaDodsland
North CentralCarbonates
Prospect Inventory
10
Light Oil
Gas
Oil Sands
Cumulative Resource
Production
14%
2%
0%
Discovered Petroleum Initially in Place (DPIIP), is defined in the COGEH handbook as the quantity of hydrocarbons that are estimated to be in place within a known accumulation. DPIIP is divided into recoverable and unrecoverable portions, with the estimated future recoverable portion classified as reserves and contingent resources. There is no certainty that it will be economically viable or technically feasible to produce any portion of this DPIIP except for those identified as proved or probable reserves. At this time all of the DPIIP not classified as reserves would be classified as Unrecoverable Resources.
OOIP / OGIP
8.5 B bbls
18 Tcf
2.75 B bbls
Incremental
Recovery
85 million bbls
180 Bcf
27.5 million bbls
1%
11
Unlocking Oil in Place
CardiumWest Central Alberta
West Central AB - Cardium
bbls OOIP10 billion
wells (net)2,400
current production~25,000 boe/d
880 sections (net)
1.6 billion bbls recovered to date
2 – 5 billion bbls potentialOOIP additions
12Penn West land
Pembina
WillesdenGreen
WestPembina
Leafland
Garrington
Strachan
Ferrybank
BuckLake
Vertically definedpool boundary
Cardium trend
20 miles
30 kms
Program Summary
Cardium Land Holding – Existing
13
Source: Company reports, Scotia Capital estimates.
530
0
100
NetSections
200
300
400
500
204160150150150
100 95 92 81 75 66 52 49 47 40 40 38 30 23 19 17 17 9 8
600
700
800
PennWest
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
880
+ Halo
Penn West land position
Light Oil Resource Plays
14
Cardium
net sections880 wellinventory2,000 +
50 2010 net wells
Penn West land position
Light Oil Resource Plays
15
Cardium
Waskada
net sections125 wellinventory1,000
60 2010 net wells
Penn West land position
Light Oil Resource Plays
16
Dodsland
Cardium
Waskada
net sections280 wellinventory1,000
70 2010 net wells
Penn West land position
Light Oil Resource Plays
17
DevonianCarbonates
Cardium
Dodsland Waskada
net sections300 wellinventory200 +
25 2010 net wells
Unlocking Oil in Place
Peace RiverCentral Alberta
18
Peace River Oil Partnership
19
Strategic Rationale
• Establish key technical and financial relationship
• Increase pace of development
(primary and thermal)
• Operate Peace River as a stand alone project
reflecting its uniqueness in Penn West
Peace River Oil Partnership
20
Penn West contributes:• 106,650 acres (45% of 237,000 acres)
• 1,215 boe/d (45% of 2,700 boe/d)
• $56 million go forward investment (10% of PWT’s 55% interest)
Partner contributes:
• $312 million cash (paid to PWT directly)
• $505 million go forward investment (90% of PWT’s 55% interest)
• $459 million capital (45% interest)
Key Points
21
* Pro Forma debt at March 31, 2010 net of equity private placement and funds received from the formation of the Peace River Oil Partnership announced May 13, 2010.** On April 30, 2010 Penn West Petroleum Ltd. Closed the renewal of its unsecured revolving syndicated bank facility.*** All debentures expire prior to December 31, 2011 and can be settled with equity.
Credit Capacity
$1.75 billionundrawn**
$500 million drawn*
Total Debt
PrivateDebt$1.6
billionConvertibleDebentures***$273 million
Bank Debt$0.5 billion
Setting the Course for the Future
Stock ExchangeToronto: PWT.UNNew York: PWE
Legal CounselBurnet, Duckworth & Palmer LLP
Independent Reserves EvaluatorsGLJ Petroleum Consultants Ltd.Sproule Associates Limited
Transfer AgentCIBC Mellon Trust CompanyToll Free: 1-800-387-0825Email: [email protected]: www.cibcmellon.ca
Investor RelationsJason Fleury, Manager, Investor RelationsTelephone: (403) 539-6343Email: [email protected]
Toll Free: 1-888-770-2633Email: [email protected]: www.pennwest.com
Penn West EnergySuite 200, 207 – 9th Avenue SWCalgary, Alberta, Canada T2P 1K3Telephone: (403) 777-2707Toll Free: 1-866-693-2707Facsimile: (403) 777-2699Website: www.pennwest.com