CORPORATE PRESENTATION - August 14, 2019 - Criterion Research
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CORPORATE PRESENTATION
August 14, 2019
FORWARD-LOOKING INFORMATION:
Certain statements contained in this presentation constitute forward-looking statements and information (collectively referred to as “forward-looking information”) within the meaning of applicable Canadian securities laws. Such forward-looking information relates to future events or Birchcliff’s future performance. All information
other than historical fact may be forward-looking information. Such forward-looking information is often, but not always, identified by the use of words such as “seek”, “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “estimated”, “forecast”, “potential”, “proposed”, “predict”, “budget”, “continue”, “targeting”,
“may”, “will”, “could”, “might”, “should” and other similar words and expressions. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Accordingly, readers
are cautioned not to place undue reliance on such forward-looking statements. Although Birchcliff believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct and Birchcliff makes no representation that actual results achieved will
be the same in whole or in part as those set out in the forward-looking statements.
In particular, this presentation contains forward-looking statements relating to the following: Birchcliff’s plans and other aspects of its anticipated future financial performance, operations, focus, objectives, strategies, opportunities, priorities and goals; Birchcliff’s expectation that it would have achieved the mid-point of its previous
2019 annual average production guidance range of 76,000 to 78,000 boe/d; Birchcliff’s guidance regarding its 2019 Capital Program and its proposed exploration and development activities and the timing thereof (including: estimates of capital expenditures and capital allocation; the number and types of wells to be drilled and brought
on production and the timing thereof; and the focus of, the objectives of and the anticipated results from and the expected benefits of the expanded 2019 Capital Program); Birchcliff’s market diversification and hedging activities, strategies and use of risk management techniques (including statements that Birchcliff maintains an
ongoing hedging program and engages in various risk management activities to reduce its exposure to volatility in commodity prices and utilizes various financial instruments and physical delivery contracts); Birchcliff’s marketing and transportation arrangements (including that effective November 1, 2019, Birchcliff’s level of firm
service on TCPL’s Canadian Mainline to Dawn will increase by 25,000 GJ/d, bringing the total level of firm service to 175,000 GJ/d); the performance and other characteristics of Birchcliff’s oil and natural gas properties and expected results from its assets (including statements regarding the potential or prospectivity of Birchcliff’s
properties); that Birchcliff is focused on continuous improvements in all aspects of its business and the use of, and expected benefits from, new technologies; statements regarding the planned inlet liquids-handling facility at the Pouce Coupe Gas Plant (including the capacity of the facility, the anticipated timing for the completion of the
facility and that the facility will give Birchcliff the ability to grow its condensate production to 10,000 bbls/d in Pouce Coupe); that Birchcliff’s capital expenditures in 2019 are still expected to be significantly less than its forecast of 2019 adjusted funds flow; that Birchcliff will generate significant free funds flow in 2019; that Birchcliff is
committed to maintaining financial flexibility and a strong balance sheet and will allocate remaining free funds flow based on what Birchcliff believes will provide the most value to its shareholders; that effectively 88% of Birchcliff’s total revenue in 2019, representing 74% of its total production, is expected to be based on non-AECO
benchmark prices; Birchcliff’s expectation that its natural gas market diversification together with its financial risk management contracts will help to further strengthen Birchcliff’s balance sheet and protect its cash flow and project economics; and the expected impact of changes in commodity prices and the CDN/US exchange rate on
Birchcliff’s estimate of adjusted funds flow); and Birchcliff’s views on future commodity prices, including that higher natural gas prices are typically seen at AECO in the winter.
With respect to the forward-looking statements contained in this presentation, assumptions have been made regarding, among other things: prevailing and future commodity prices and differentials, currency exchange rates, interest rates, inflation rates, royalty rates and tax rates; the state of the economy, financial markets and the
exploration, development and production business; the political environment in which Birchcliff operates; the regulatory framework regarding royalties, taxes and environmental laws; the Corporation’s ability to comply with existing and future environmental, climate change and other laws; future cash flow, debt and dividend levels;
future operating, transportation, marketing, G&A and other expenses; Birchcliff’s ability to access capital and obtain financing on acceptable terms; the timing and amount of capital expenditures and the sources of funding for capital expenditures and other activities; the sufficiency of budgeted capital expenditures to carry out planned
operations; the successful and timely implementation of capital projects; results of future operations; Birchcliff’s ability to continue to develop its assets and obtain the anticipated benefits therefrom; the performance of existing and future wells, well production rates and well decline rates; success rates for future drilling; reserves and
resource volumes and Birchcliff’s ability to replace and expand reserves through acquisition, development or exploration; the impact of competition on Birchcliff; the availability of, demand for and cost of labour, services and materials; the ability to obtain any necessary regulatory or other approvals in a timely manner; the satisfaction
by third parties of their obligations to Birchcliff; the ability of Birchcliff to secure adequate processing and transportation for its products; Birchcliff’s ability to market oil and gas; the availability of hedges on terms acceptable to Birchcliff; and natural gas market exposure. In addition to the foregoing assumptions, Birchcliff has made the
following assumptions with respect to certain forward-looking statements contained in this presentation:
• With respect to estimates of 2019 capital expenditures and Birchcliff’s spending plans for 2019, such estimates and plans assume that the expanded 2019 Capital Program will be carried out as currently contemplated.
• Birchcliff makes acquisitions and dispositions in the ordinary course of business. Any acquisitions and dispositions completed could have an impact on Birchcliff’s capital expenditures, production, adjusted funds flow, free funds flow, costs and total debt, which impact could be material.
• The amount and allocation of capital expenditures for exploration and development activities by area and the number and types of wells to be drilled and brought on production is dependent upon results achieved and is subject to review and modification by management on an ongoing basis throughout the
year. Actual spending may vary due to a variety of factors, including commodity prices, economic conditions, results of operations and costs of labour, services and materials. Birchcliff will monitor economic conditions and commodity prices and, where deemed prudent, will adjust its capital program to respond
to changes in commodity prices and other material changes in the assumptions underlying such program.
• With respect to Birchcliff’s production guidance for 2019, such guidance assumes that: the expanded 2019 Capital Program will be carried out as currently contemplated; no unexpected outages occur in the infrastructure that Birchcliff relies on to produce its wells and that any transportation service curtailments or unplanned
outages that occur will be short in duration or otherwise insignificant; the construction of new infrastructure meets timing and operational expectations; existing wells continue to meet production expectations; and future wells scheduled to come on production meet timing, production and capital expenditure expectations.
Birchcliff’s production guidance may be affected by acquisition and disposition activity and acquisitions and dispositions could occur that may impact expected production.
• With respect to Birchcliff’s estimates of adjusted and free funds flow for 2019 and statements that Birchcliff will generate significant free funds flow during 2019, such estimates and statements assume that: the expanded 2019 Capital Program will be carried out as currently contemplated and the level of capital spending for
2019 set forth herein will be achieved; and the production targets, commodity mix, natural gas market exposure and commodity price assumptions set forth herein are met. In addition, Birchcliff’s estimate of adjusted funds flow takes into account the settlement of financial and commodity risk management contracts
outstanding as at August 13, 2019.
• With respect to statements of future wells to be drilled and brought on production, the key assumptions are: the continuing validity of the geological and other technical interpretations performed by Birchcliff’s technical staff, which indicate that commercially economic volumes can be recovered from Birchcliff’s lands as a result
of drilling future wells; and that commodity prices and general economic conditions will warrant proceeding with the drilling of such wells.
• With respect to statements regarding the future potential and prospectivity of properties and assets, such statements assume: the continuing validity of the geological and other technical interpretations determined by Birchcliff’s technical staff with respect to such properties; and that, over the long-term, commodity prices and
general economic conditions will warrant proceeding with the exploration and development of such properties.
Birchcliff’s actual results, performance or achievements could differ materially from those anticipated in the forward-looking statements as a result of both known and unknown risks and uncertainties including, but not limited to: general economic, market and business conditions which will, among other things, impact the demand for
and market prices of Birchcliff’s products and Birchcliff’s access to capital; volatility of crude oil and natural gas prices; fluctuations in currency and interest rates; stock market volatility; loss of market demand; an inability to access sufficient capital from internal and external sources; fluctuations in the costs of borrowing; operational
risks and liabilities inherent in oil and natural gas operations; the occurrence of unexpected events such as fires, equipment failures and other similar events affecting Birchcliff or other parties whose operations or assets directly or indirectly affect Birchcliff; uncertainty that development activities in connection with its assets will be
economical; uncertainties associated with estimating oil and natural gas reserves and resources; the accuracy of oil and natural gas reserves estimates and estimated production levels; geological, technical, drilling, construction and processing problems; uncertainty of geological and technical data; horizontal drilling and completions
techniques and the failure of drilling results to meet expectations for reserves or production; uncertainties related to Birchcliff’s future potential drilling locations; potential delays or changes in plans with respect to exploration or development projects or capital expenditures, including delays in the completion of gas plants and other
facilities; the accuracy of cost estimates and variances in Birchcliff’s actual costs and economic returns from those anticipated; incorrect assessments of the value of acquisitions and exploration and development programs; changes in tax laws, Crown royalty rates, environmental laws, carbon tax regimes, incentive programs and other
regulations that affect the oil and natural gas industry and other actions by government authorities; an inability of the Corporation to comply with existing and future environmental, climate change and other laws; the cost of compliance with current and future environmental laws; political uncertainty and uncertainty associated with
government policy changes; uncertainties and risks associated with pipeline restrictions and outages to third-party infrastructure that could cause disruptions to production; the lack of available pipeline capacity and an inability to secure adequate processing and transportation for Birchcliff’s products; an inability to satisfy obligations
under Birchcliff’s firm marketing and transportation arrangements or other agreements; shortages in equipment and skilled personnel; the absence or loss of key employees; competition for, among other things, capital, acquisitions of reserves, undeveloped lands, equipment and skilled personnel; management of Birchcliff’s growth;
environmental risks, claims and liabilities; uncertainties associated with the outcome of litigation or other proceedings involving Birchcliff; unforeseen title defects; uncertainties associated with credit facilities and counterparty credit risk; non-performance or default by counterparties; risks associated with Birchcliff’s risk management
program and the risk that hedges on terms acceptable to Birchcliff may not be available; risks associated with the declaration and payment of future dividends, including the discretion of Birchcliff’s board of directors to declare dividends and change the Corporation’s dividend policy; the failure to obtain any required approvals in a
timely manner or at all; the failure to realize the anticipated benefits of acquisitions and dispositions and the risk of unforeseen difficulties in integrating acquired assets into Birchcliff’s operations; negative public perception of the oil and natural gas industry and fossil fuels, including transportation and hydraulic fracturing involving
fossil fuels; the Corporation’s reliance on hydraulic fracturing; the availability of insurance and the risk that certain losses may not be insured; and breaches or failure of information systems and security (including risks associated with cyber-attacks).
Readers are cautioned that the foregoing lists of factors are not exhaustive. Additional information on these and other risk factors that could affect results of operations, financial performance or financial results are included in Birchcliff’s most recent Annual Information Form and in other reports filed with Canadian securities regulatory
authorities.
This presentation contains information that may constitute future-orientated financial information or financial outlook information (collectively, “FOFI”) about Birchcliff’s prospective results of operations including, without limitation, adjusted funds flow and free funds flow, all of which is subject to the same assumptions, risk factors,
limitations and qualifications as set forth above. 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 imprecise or inaccurate and, as such, undue reliance should not be placed on FOFI. Birchcliff’s actual results,
performance and achievements could differ materially from those expressed in, or implied by, FOFI. Birchcliff has included FOFI in order to provide readers with a more complete perspective on Birchcliff’s future operations and management’s current expectations relating to Birchcliff’s future performance. Readers are cautioned that
such information may not be appropriate for other purposes. FOFI contained herein was made as of the date of this presentation. Unless required by applicable laws, Birchcliff does not undertake any obligation to publicly update or revise any FOFI statements, whether as a result of new information, future events or otherwise.
Management has included the above summary of assumptions and risks related to forward-looking statements provided in this presentation in order to provide readers with a more complete perspective on Birchcliff’s future operations and management’s current expectations relating to Birchcliff’s future performance. Readers are
cautioned that this information may not be appropriate for other purposes.
The forward-looking statements contained in this presentation are expressly qualified by the foregoing cautionary statements. The forward-looking statements contained herein are made as of the date of this presentation. Unless required by applicable laws, Birchcliff does not undertake any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise.
SELECTED DEFINITIONS:
“2018 Deloitte Reserves Report” means the evaluation by Deloitte LLP effective December 31, 2018 as contained in the report of Deloitte dated February 13, 2019.
“2018 McDaniel Reserves Report” means evaluation by McDaniel with an effective date of December 31, 2018 as contained in the report of McDaniel dated February 13, 2019.
“2018 Consolidated Reserves Report” means the consolidated report of Deloitte with an effective date of December 31, 2018 prepared by consolidating the properties evaluated by Deloitte in the 2018 Deloitte Reserves Report with the properties evaluated by McDaniel in the 2018 McDaniel Reserves Report, in each case using
Deloitte’s forecast price and cost assumptions effective December 31, 2018
“Deloitte” means Deloitte LLP, independent qualified reserves evaluator to the Corporation.
“McDaniel” means McDaniel & Associates Consultants Ltd., independent qualified reserves evaluator to the Corporation.
“PC Gas Plant” refers to Birchcliff’s 100% owned and operated natural gas plant located in the Pouce Coupe area of Alberta.
August 14, 2019 2
PEOPLE, FOCUS & EXECUTION August 14, 2019 3
Corporate Snapshot & Select Guidance
Q2 2019 average production 78,453 boe/d
Q2 2019 adjusted funds flow (millions / per share) $74.0 / $0.28 per share
Estimated 2019 annual average production 77,000 – 79,000 boe/d
% oil and NGL 22%
Estimated 2019 adjusted funds flow (millions) (1) $335
Estimated 2019 F&D capital expenditures (millions) $242
Estimated 2019 free funds flow (millions) (2) $93
Total debt as at June 30, 2019 (millions) (3) $654.7
Credit facilities limit as at June 30, 2019 (billions) $1.0
Common shares (basic) as at June 30, 2019 (millions) 265.9
Market capitalization as at August 13, 2019 (billions) - $2.29/sh $0.7
Enterprise value as at August 13, 2019 (billions) - $2.29/sh (4) $1.4
Montney/Doig land position as at December 31, 2018 (gross sections) 367.4
Montney/Doig potential net future horizontal drilling locations as at December 31, 2018 (5) 6,365.8
Gross proved developed producing reserves as at December 31, 2018 (6) 203,631 Mboe
Gross proved plus probable reserves as at December 31, 2018 (6) 1,002,070 Mboe
PDP Adjusted Funds Flow Recycle Ratio (including change in FDC) – 2018 (6) 1.3x
TSX 300 BIR, BIR.PR.A, BIR.PR.C
Quarterly dividend to common shareholders $0.02625/sh
(1) 2019 commodity assumptions: WTI price of US$57.50/bbl; WTI-MSW differential of $7.50; AECO price of $1.50/GJ; Dawn price of $3.05/GJ; NYMEX-Henry Hub price of US$2.70/MMBtu; and 1.32 USD/CAD FX.
(2) Free funds flow is calculated as adjusted funds flow less F&D capital expenditures and is prior to administrative assets, acquisitions, dispositions, dividend payments and abandonment and reclamation obligations. See “Non-GAAP Measures”. Free funds flow may be used by Birchcliff to reduce debt, pursue additional
growth, pay dividends and/or to fund share buybacks under its normal course issuer bid. Any prolonged or significant decrease in commodity prices may leave insufficient free funds flow for debt reduction or the other foregoing purposes.
(3) Total debt excludes capital securities of $49.7 million related to Series C preferred shares.
(4) Enterprise value is calculated by multiplying the closing price of the common shares on the TSX by the total number of common shares outstanding and adding total debt, including the face value of the Series A Preferred Shares and Series C Preferred Shares.
(5) See “Advisories – Drilling Locations”.
(6) See appendix at the end of this presentation for disclosures on oil & gas reserves and related metrics
August 14, 2019 4
Q2 2019 HIGHLIGHTS
• Quarterly average production of 78,453 boe/d, a 3% increase from 76,296 boe/d in Q2 2018
• Quarterly adjusted funds flow of $74.0 million ($0.28/basic common share), a 2% increase
from $72.4 million ($0.27/basic common share) in Q2 2018
• Record low quarterly operating costs of $3.17/boe, a 6% decrease from $3.36/boe in Q2 2018
• Drilled 5 (5.0 net) wells in Q2 2019, consisting of 3 (3.0 net) Montney/Doig horizontal oil wells
in the Gordondale area and 2 (2.0 net) Montney/Doig horizontal condensate-rich natural gas
wells in the Pouce Coupe area
• Two new pads (a six well pad in Pouce Coupe and a five well pad in Gordondale) produced
strong aggregate average IP rates of 6,350 boe/d and 4,446 boe/d, respectively, during the
initial 30 days of production
• As a result of Birchcliff’s achievements year-to-date and continued strong quarterly results
and balance sheet, subsequent to Q2/19, Birchcliff expanded its 2019 Capital Program to
include the drilling of an additional 7 (7.0 net) horizontal wells in 2019 which are targeting
condensate-rich natural gas in Pouce Coupe and oil in Gordondale. It is anticipated that all
of these wells will be brought on production by November 1, 2019
• As a result of the strong results and expanded Capital Program, Birchcliff has increased its
2019 Guidance to 77,000-79,000 boe/d (previously 76,000-78,000 boe/d)
August 14, 2019 5
INVESTMENT HIGHLIGHTS
• Focused assets in the Peace River Arch Area of Alberta on the Montney/Doig
Resource Play
• Essentially 100% working interest; 99% of production is operated
• Large, contiguous undeveloped land base with an average 89% W.I.
• Significant control of infrastructure including the 100% owned and operated 340
MMcf/d Pouce Coupe Gas Plant (“PC Gas Plant”)
• Top tier cost structure driving peer leading profitability
• Low decline production base (est. 20% in 2019)
• 2P reserve life index (RLI)(1)(2) of approximately 35.6 years as at December 31, 2018
• 385 (380.6 net) Montney/Doig horizontal wells drilled as at December 31, 2018
• 6,365.8 net future potential Montney/Doig horizontal drilling locations as at December
31, 2018(3)
(1) See appendix at the end of this presentation for disclosures on oil & gas reserves and related metrics.
(2) Reserves life index is calculated by dividing reserves estimated by Deloitte at December 31, 2018 by 77,000 boe/d.
(3) See “Advisories – Drilling Locations”.
August 14, 2019 6
BIRCHCLIFF’S HISTORY
A Track Record of Execution
KEYS TO SUCCESS
Executives with proven track record, continuity since inception and significant ownership
Management Highly experienced Management Team with excellent technical knowledge and a long history with
the company
385 (380.6 net) Montney/Doig horizontal wells drilled to December 31, 2018 all utilizing multi-stage
Operational fracture stimulated technology
Execution Construction of the 340 MMcf/d PC Gas Plant in six separate phases on time and on budget
Own, control or have access to infrastructure and operate 99% of production
Significant in-house technical expertise and experience on the Peace River Arch
Technical Supports continual improvements in high grading portfolio for the decision making process
Expertise Continued improvements in estimated reserve recovery per well, drilling & completion practices and
operating costs
Scale & Consistent, repeatable, predictable growth and results
Repeatability 6,365.8 potential Montney/Doig horizontal locations and as at December 31, 2018(1)
Full cycle profitability with top tier F&D costs and netbacks through 2018 and prior years
Financial
Accurate and reliable real time forecasts supported by a detailed capital management and production
Execution
forecasting process which is fully integrated into our financial reporting systems
(1) See “Advisories – Drilling Locations”
August 14, 2019 8
PRODUCTION HISTORY
90,000
77,000 -
79,000
80,000 77,096
Compound per-share production
growth of 12% per year since 2005.
70,000 67,963
(14% since PC Gas Plant Phase I
Average Production (boe/d)
Completion)
60,000
49,236
50,000
38,950
40,000
33,734
30,000 25,829
22,802
20,000 18,136
13,079
10,148 11,216
10,000 5,368 6,711
2,793
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E
August 14, 2019 9
CORPORATE RESERVES
1,200,000 $7,000
PDP - Reserves
1,100,000 TP - Reserves
2P - Reserves $6,000
1,000,000
PDP - NPV10 On a per share basis PDP, 1P and 2P
900,000 TP - NPV10 reserves have increased at a compound
$5,000
2P - NPV10 annual growth rate of 13%, 21% and 20%
800,000 per year since 2005, respectively
NPV10 - Btax ($MM)
Reserves (Mboe)
700,000 $4,000
600,000
500,000 $3,000
400,000
$2,000
300,000
200,000
$1,000
100,000
0 $0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
(1) See appendix at the end of this presentation for disclosures on oil & gas reserves and related metrics.
August 14, 2019 10PROVEN TRACK RECORD AS A
LOW COST PRODUCER
5 Year
Profitability Breakdown: 2014 2015 2016 2017 2018 Average
Average AECO (CAD$/GJ) $4.27 $2.55 $2.05 $2.04 $1.42 $2.47
Average WTI (USD$/bbl) $92.99 $48.80 $43.32 $50.95 $64.77 $60.17
P&NG Revenue ($/Mcfe) (1) $6.40 $3.72 $3.12 $3.74 $3.68 $4.13
PDP F&D ($/Mcfe)(2) ($2.23) ($1.35) ($1.07) ($1.05) ($1.46) ($1.43)
Total Cash Costs(3)
($/Mcfe)
($2.34) ($1.83) ($1.77) ($1.78) ($1.74) ($1.89)
Profit ($/Mcfe)(4)(5) $1.83 $0.53 $0.29 $0.91 $0.48 $0.81
Profit Margin (%)(4) 29% 14% 9% 24% 13% 18%
(1) Excludes the effects of hedges using financial instruments but includes the effects of fixed price physical delivery contracts and higher average realized pricing for a portion of natural gas sold at Dawn.
(2) Cost to find and develop proved developed producing (PDP) reserves based on finding and development (“F&D”) costs.
(3) Comprised of royalty, operating, transportation and marketing, general and administrative and interest expenses.
(4) Profit measures the amount, if any, during the relevant period by which revenues resulting from production exceed the sum of: (i) PDP F&D (i.e. the costs of replacing production excluding acquisitions and dispositions), (ii) royalty, operating and transportation and marketing expenses and, in the case of Birchcliff at the
business-entity level, (iii) general and administrative expense, and (iv) interest expense. This measure is not intended to represent net income or net income to common shareholders as presented in accordance with IFRS. Profit margin is calculated by dividing profit before non-cash items for the period by petroleum and
natural gas revenue for the period. We believe that profit and profit margin are useful measures as they assist management and investors in assessing our ability during a period of declining commodity prices to bear all of our total cash costs and the costs of replacing our production during the relevant period. See “Non-
GAAP Measures” in this presentation.
(5) Numbers may not add due to rounding
August 14, 2019 11PROVEN TRACK RECORD AS A
LOW COST FINDER
$16
PDP F&D 1P F&D 2P F&D
1.8x 1.8x
Adjusted Funds Flow
$12
1.9x netback recycle
F&D Cost ($/boe)
ratios
$8 1.3x
1.4x 1.6x 1.6x
1.8x
1.3x 2.0x 2.1x
$4 2.4x
1.7x 1.8x
8.8x
4.7x 7.3x 17.4x
$0
2014 2015 2016 2017 2018 5 Yr Wtd. Avg
Corporate F&D Costs (incl. FDC) & Cash Flow Recycle Ratios
2014 2015 2016 2017 2018 5 Yr Wtd. Avg
PDP F&D ($/boe) $13.40 $8.11 $6.42 $6.29 $8.75 $8.59
1P F&D ($/boe) $13.51 $2.41 $4.89 $8.14 $0.64 $5.92
2P F&D ($/boe) $12.57 $1.55 $4.43 $7.27 $1.27 $5.42
PDP Recycle Ratio 1.8x 1.4x 1.3x 2.0x 1.3x 1.6x
1P Recycle Ratio 1.8x 4.7x 1.7x 1.6x 17.4x 2.1x
2P Recycle Ratio 1.9x 7.3x 1.8x 1.8x 8.8x 2.4x
August 14, 2019 12CORPORATE RESPONSIBILITY
• Environmental, Social & Governance
• Waste heat recovery units on phases V & VI of the PC Gas
Plant and additional emission reduction initiatives take the
equivalent of >5,000 cars off the road annually
• Peer-leading water storage and infrastructure has taken the
equivalent of over 20,000 large water handling trucks off the
road since 2017
• Birchcliff wellsites are designed to have zero vented
emissions, taking the equivalent of 142 cars per wellsite off
the road annually
• Birchcliff recovers 99.1% of our permitted flare volumes
during completions, this takes the equivalent of >3,000 cars
off the road annually
• Birchcliff exceeds industry safety standards by conducting
an Emergency Response Preparedness exercise every
year, compared the requirement of every 3 years
• Regulatory Compliance
• Birchcliff has an LMR rating of 18.8 (as of August 3, 2019)
compared to the industry average of 4.8, highlighting our
success in addressing abandonment and reclamation
obligations
August 14, 2019 13CORPORATE RESPONSIBILITY
• Community Involvement
• Over $3 million donated to more than 100 local community groups and
organizations in the last 3 years
• Continued partnerships with local communities through educational,
cultural, and economic development initiatives
• Annual open-house to meet with and receive feedback from local land
owners
• Strong supporter of STARS Air Ambulance and the United Way of Calgary,
surpassing the $1 million mark in donations to both organizations
• Significant Indigenous engagement
• Employees
• Birchcliff has a strong record of success built on the belief that
outstanding people combined with a great culture creates a winning
environment
• Strong internal mentoring program encourages senior employees to
develop our junior staff
• Employee education funds and scholarships promote continued
knowledge enhancement
View our 2018 Corporate Responsibility Report at birchcliffenergy.com
August 14, 2019 14LOOKING FORWARD
2019 Plans & BeyondEXPANDED 2019 CAPITAL PROGRAM THEMES
• As a result of Birchcliff’s achievements year-to-date and its strong quarterly
results and balance sheet, Birchcliff has expanded the 2019 Capital Program to
include the drilling of an additional 7 (7.0 net) horizontal wells in 2019 which are
targeting condensate-rich natural gas in Pouce Coupe and oil in Gordondale
• It is anticipated that all of these wells will be brought on production by
November 1, 2019
• The expanded 2019 F&D capital program of $242 MM includes drilling a total of
24 (24.0 net) wells and the completion and bringing on production of 33 (33.0
net) wells
• Birchcliff continues to target its total capital expenditures to be less than its
adjusted funds flow in 2019. Free funds flow is estimated to be $93 MM in
2019(1)(2)
• 2019 annual average production guidance is for 77,000 to 79,000 boe/d
(1) 2019 commodity assumptions: WTI price of US$57.50/bbl; WTI-MSW differential of $7.50; AECO price of $1.50/GJ; Dawn price of $3.05/GJ; NYMEX-Henry Hub price of US$2.70/MMBtu; and 1.32 USD/CAD FX.
(2) Free funds flow is calculated as adjusted funds flow less F&D capital expenditures and is prior to administrative assets, acquisitions, dispositions, dividend payments and abandonment and reclamation obligations. See “Non-GAAP Measures”. Free funds flow may be used by Birchcliff to reduce debt, pursue
additional growth, pay dividends and/or to fund share buybacks under its normal course issuer bid. Any prolonged or significant decrease in commodity prices may leave insufficient free funds flow for debt reduction or the other foregoing purposes.
August 14, 2019 16EXPANDED 2019 CAPITAL PROGRAM DETAILS
2019 F&D CAPITAL PROGRAM
Drilling & Development Gross Wells Net Wells Capital ($MM)
Previous(1) Revised Previous(1) Revised Previous(1) Revised
(2)(3)
Pouce Coupe
Montney D1 Horizontal Natural Gas Wells 6 9 6.0 9.0 $34.8 $49.3
Montney D2 Horizontal Natural Gas Wells 2 2 2.0 2.0 $11.4 $12.3
Montney C Horizontal Natural Gas Wells 1 1 1.0 1.0 $6.2 $6.0
Gordondale(2)(3)
Montney D2 Horizontal Oil Wells 5 7 5.0 7.0 $27.4 $38.2
Montney D1 Horizontal Oil Wells 3 5 3.0 5.0 $16.2 $26.3
(4)
Additional Well Completions Capital - - - - $26.2 $25.3
Total Drilling and Development 17 24 17.0 24.0 $122.2 $157.4
(5)
Facilities and Infrastructure $33.9 $35.1
Maintenance and Optimization $22.8 $24.7
Land & Seismic(6) $8.4 $8.6
Other $16.7 $16.2
2019 F&D Capital Program(7)(8) $204.0 $242.0
(1) As previously disclosed on February 13, 2019.
(2) On a DCCET basis, the average well cost in 2019 is estimated to be $5.7 million for Pouce Coupe and $5.6 million (previously $5.8 million) for Gordondale. These costs can vary depending on
factors such as the size of the associated multi-well pads, the costs of construction, the existence of pipelines and other infrastructure and the distance to existing or planned pipelines and other
infrastructure.
(3) On a DCCET basis.
(4) The amount disclosed in the “Previous” column represented the estimated completion, equipping and tie-in costs associated with the 9 (9.0 net) wells that were drilled and rig released in Q4
2018, as the amount of the actual costs was not yet known when the previous 2019 Capital Program was disclosed on February 13, 2019. The amount disclosed in the “Revised” column
represents the actual completion, equipping and tie-in costs associated with such wells.
(5) Includes capital for the inlet liquids-handling facility at the Pouce Coupe Gas Plant and other infrastructure enhancement projects, pipeline twinning and replacements and water storage.
Birchcliff plans on spending approximately $9.5 million on the associated engineering and long-lead equipment for the inlet liquids-handling facility in 2019.
(6) Includes capital for crown sales and rental payments but does not include other property acquisitions and dispositions.
(7) The estimate of capital set forth in the table above represents F&D capital expenditures and does not take into account the purchase price for the $39 million asset acquisition in Pouce Coupe
completed by Birchcliff in Q1 2019. After taking into account the purchase price for the Acquisition, Birchcliff’s revised estimate of total capital expenditures in 2019 is $283 million. Net property
acquisitions and dispositions have not been included in the table above as these amounts are generally unbudgeted. Birchcliff makes acquisitions and dispositions in the ordinary course of
business and any acquisitions and dispositions completed during 2019 could have an impact on Birchcliff’s capital expenditures, production, adjusted funds flow, costs and total debt, which impact
could be material.
(8) Approximately 51% of Birchcliff’s F&D capital expenditures are directed towards its Pouce Coupe area (previously 50%) and approximately 45% towards its Gordondale area (previously 40%).
Birchcliff expects that its F&D capital investment in 2019 will now be approximately $122 million in Pouce Coupe (previously $100 million) and $109 million in Gordondale (previously $84 million).
August 14, 2019 172019E NATURAL GAS MARKETING
AECO
$1.50
$0.03
$0.34
$1.13
142,000 GJ/d
34%
38%
3% 163,000 GJ/d
Dawn
$3.05
13,000 GJ/d $0.15
Alliance $1.21
25% $1.69
$2.47
$0.03
$0.58
105,000 GJ/d $1.86 Note: All Birchcliff gas realizes a
Henry Hub 9% heat premium(1)
Dif.(6)
US$2.70/MMBTU $3.38 Pricing Hub
US$1.28/MMBTU $1.60 Forecasted Sales Price at Hub (C$/GJ)(2)
$0.03 Hedged Differential (C$/GJ)(2)
$0.34 Estimated Fuel Cost From Field to Sales Point (C$/GJ)(3)
$1.41 Estimated Transportation Cost From Field to Sales Point (C$/GJ)(4)
Estimated Sales Netback (C$/GJ)(5)
(1) Birchcliff receives premium pricing for its natural gas production due to its high heat content. The conversion from $/Gj to $/Mcf is approximately 1.155 for Birchcliff compared to the standard 1.055
(2) Volume assumptions based on 2019 guidance; Pricing based on internal forecasts and 1.32 USD/CAD FX
(3) Recorded net of extraction income
(4) Recorded as transportation expense for: AECO & Dawn service. Transportation expense recorded net of realized wellhead price for Alliance service
(5) Estimated sales netback = realized sales price net of transportation back to wellhead, fuel, income sources and net of any hedge differential
(6) Excludes the effects of AECO basis swap financial derivative contracts - buy
*Pie charts indicate % of volumes forecast to be sold at the respective hub/contract based on 2019 production guidance
August 14, 2019 18Q2/19 REALIZED NATURAL GAS PRICING –
PHYSICAL SALES
$3.50 In Q2/19, Birchcliff
$3.32
realized a 76% premium to
$3.00 AECO spot pricing for its
natural gas
$2.50
$2.00 $1.95 $1.94
$1.49
$/Mcf
$1.50
$1.24
$1.11
$1.00
$0.79
$0.50
$0.00
BIR Corporate AECO Dawn Alliance (1)
% of Q2/19 corporate
= 100% 59% 37% 4%
Natural gas volumes
Q2/19 Sales Netback Q2/19 Sales Price
(1) Birchcliff has sales agreements with a third party marketer to sell and deliver into the Alliance pipeline system for a contract price, net of transportation. Birchcliff receives a sales price net of all transportation costs.
August 14, 2019 19RISK MANAGEMENT, HEDGING &
DIVERSIFICATION(3)
• In 2019, approximately 66% of Birchcliff’s natural gas production will effectively be
sold at prices that are not based on AECO (based on 2019 production guidance of
77,000 - 79,000 BOE/d)
(1)
Product Type of Contract Notional Quantity Term Fixed/Floating Price
Financial Derivative Contracts – Sell
Natural gas AECO basis swap 30,000 MMBtu/d Jan. 1, 2019 – Dec. 31, 2023 NYMEX Henry Hub less US$1.298/MMBtu
Natural gas AECO basis swap 10,000 MMBtu/d Jan. 1, 2019 – Dec. 31, 2023 NYMEX Henry Hub less US$1.32/MMBtu
Natural gas AECO basis swap 30,000 MMBtu/d Jan. 1, 2019 – Dec. 31, 2023 NYMEX Henry Hub less US$1.33/MMBtu
Natural gas AECO basis swap 15,000 MMBtu/d Jan. 1, 2019 – Dec. 31, 2024 NYMEX Henry Hub less US$1.185/MMBtu
Natural gas AECO basis swap 5,000 MMBtu/d Jan. 1, 2019 – Dec. 31, 2024 NYMEX Henry Hub less US$1.20/MMBtu
Natural gas AECO basis swap 5,000 MMBtu/d Jan. 1, 2019 – Dec. 31, 2024 NYMEX Henry Hub less US$1.20/MMBtu
Financial Derivative Contracts – Buy
Natural gas AECO basis swap 10,000 MMBtu/d Jan. 1, 2019 – Mar. 31, 2019 NYMEX Henry Hub less US$3.10/MMBtu
Natural gas AECO basis swap 10,000 MMBtu/d Jan. 1, 2019 – Mar. 31, 2019 NYMEX Henry Hub less US$3.15/MMBtu
Natural gas AECO basis swap 30,000 MMBtu/d Jan. 1, 2019 – Mar. 31, 2019 NYMEX Henry Hub less US$3.16/MMBtu
Physical Delivery Sales Contracts – Sell
Natural Gas AECO basis swap 5,000 MMBtu/d Jan. 1, 2019 – Dec. 31, 2023 NYMEX Henry Hub less US$1.205/MMBtu
Natural Gas Dawn(2) 5,000 MMBtu/d Jan. 1, 2019 – Mar. 31, 2019 US$5.100/MMBtu
Natural Gas Dawn(2) 10,000 MMBtu/d Jan. 1, 2019 – Mar. 31, 2019 US$5.000/MMBtu
Natural Gas Dawn(2) 10,000 MMBtu/d Jan. 1, 2019 – Mar. 31, 2019 US$5.005/MMBtu
(2)
Natural Gas Dawn 10,000 MMBtu/d Jan. 1, 2019 – Mar. 31, 2019 US$5.020/MMBtu
Natural Gas Dawn(2) 15,000 MMBtu/d Jan. 1, 2019 – Mar. 31, 2019 US$5.103/MMBtu
Dawn Firm Egress – Transportation
Natural Gas Dawn firm service 120,000 GJ/d Nov. 1, 2017 – Nov. 31, 2027
Natural Gas Dawn firm service 30,000 GJ/d Nov. 1, 2018 – Nov. 31, 2027
Natural Gas Dawn firm service 25,000 GJ/d Nov. 1, 2019 – Nov. 31, 2027
(1) Transactions with common terms and the same counterparty have been aggregated and presented at the weighted average price.
(2) Birchcliff entered into 4-month physical natural gas Dawn sales arrangements commencing December 1, 2018.
(3) Chart only includes contracts effective 2019/2020. See MD&A for full risk management program.
August 14, 2019 20INCREASING WCSB NATURAL GAS EGRESS
Additional 5.2 Bcf/d coming online 2019-2024
• Intra-Alberta +1.5 Bcf/d
• East Gate +1.3 Bcf/d
LNG
2.0 Bcf/d Intra-AB Demand • West Gate +0.4 Bcf/d
1.5 Bcf/d
• West Coast LNG +2.0
CANADA Bcf/d
East Gate
1.3 Bcf/d
CALGARY
Total AB Demand/Egress
West Gate Expansion:
0.4 Bcf/d • +5.2 Bcf/d 2019-2024
August 14, 2019 21BORROWING BASE DETAILS
• During Q2/19, Birchcliff’s syndicate of lenders completed their semi-annual
review and have agreed to an extension of the maturity dates from May 10, 2021
to May 10, 2022 and to increasing the borrowing base to $1.0 billion
• Birchcliff has extendible revolving credit facilities in the aggregate principal
amount of $1.0 billion, which are comprised of an extendible revolving
syndicated term credit facility of $900 million and an extendible revolving
working capital facility of $100 million
• The credit facilities contain no financial maintenance covenants
• At June 30, 2019, Birchcliff’s long-term bank debt was $622.3 million, leaving
$357.6 million of unutilized credit capacity after adjusting for outstanding
letters of credit and unamortized interest and fees, based on the $1.0 billion of
credit facilities at June 30, 2019
August 14, 2019 22MONTNEY/DOIG RESOURCE
PLAY
A Significant Position in a World Class PlayMONTNEY/DOIG - A WORLD CLASS
RESOURCE PLAY
Resource density. Stacked resource up to
300 metres thick.
Large areal extent. Extends over 50,000
square miles.
Exceptional “fracability”. Low clay Birchcliff Montney/Doig
content, low Poisson’s Ratio and high
Young’s Modulus.
Exceptional fracture stability. Fractures
stay open due to very low proppant
embedment.
High permeability. Formation is
dominated by siltstones allowing natural
fluid flow.
Over pressured. Indicative of high gas in
place.
Repeatability. Widespread “blanket” style
deposit provides for more repeatable
results. Source: Canadian Discovery, RBC Rundle
August 14, 2019 24MONTNEY/DOIG MINEROLOGY LEADS
TO EXCELLENT “FRACABILITY”
The Montney/Doig Resource Play rock type is composed of a
Some other Resource Plays have a high percentage of clays
high percentage of hard minerals, and a low percentage of
and soft minerals. When fractured this results in the rock
clays and soft minerals. When fractured this results in a
breaking similar to concrete, in a simple bi-wing fracture
complex fracture system similar to shattering glass. This
system. This simple bi-wing fracture system can lead to less
complex fracture system enhances stimulated rock volume
stimulated rock volume, which in tight shale reservoirs can
and allows hydrocarbons to flow at greater quantities into the
lead to less effective long term hydrocarbon production rates
horizontal wellbore leading to enhanced production rates and
and EUR’s.
EUR’s.
August 14, 2019 25BIRCHCLIFF MONTNEY/DOIG
RESOURCE PLAY
• The Gordondale Acquisition in 2016
added a fourth commercial development
interval in the Montney D2
• Large contiguous land base with 367.4
sections prospective for the
Montney/Doig as at December 31, 2018
• Birchcliff has contiguous land block at
Pouce Coupe and Gordondale of
approximately 206 net sections
• Stacked resource in some of the thickest
Montney (~300m of consistent thickness)
with 6,365.8(1) net potential future
horizontal locations identified
• Low cost structure through ownership of
PC Gas Plant & surrounding field
infrastructure
• Low decline production
(1) See “Advisories – Drilling Locations”
August 14, 2019 26STACKED RESOURCE PROVIDES
SUBSTANTIAL FUTURE UPSIDE
August 14, 2019 27MONTNEY/DOIG MULTI LAYER
OPPORTUNITY
3
2
1
4 5 6
5
6
4
3
2
1
August 14, 2019 28BIRCHCLIFF MONTNEY/DOIG INVENTORY August 14, 2019 29
FOCUSED ASSETS FOCUSED INFRASTRUCTURE
POUCE COUPE GORDONDALE
Key Natural Gas Processing Infrastructure Key Natural Gas Processing Infrastructure
Pouce Coupe Natural Gas Plant AltaGas Gordondale
3-22-078-12W6 Sour Deep Cut Gas Plant
Licensed Capacity: ~340 MMcf/d 16-31-078-11W6
Current BIR Rate: ~260 MMcf/d Licensed Capacity: ~135 MMcf/d
Current BIR Rate: ~100 MMcf/d
Key Wells
Multi-Well Pad Key Light Oil Handling Infrastructure
14-06-079-12W6
Oil Battery
Q3- 2019
02-06-079-11W6
Multi-Well Pad Capacity: ~10,000 bbl/d
10-31-078-12W6
Oil Battery
Flow Splitter/Multi-Well Pad 07-29-078-11W6
06-32-078-12W6 Capacity: ~10,000 bbl/d
Q2-2019
Condensate connection to Gordondale Key Compressor Stations
Sour Compressor Station
Key Compressor Stations
02-05-079-11W6
Capacity: ~12 MMcf/d
Sour Compressor Station
16-28-079-13W6 Sour Compressor Station
Capacity: ~12 MMcf/d 05-27-078-11W6
Capacity: ~32 MMcf/d
Sour Compressor Station
07-25-077-12W6 Sour Compressor Station
Capacity: ~25 MMcf/d 16-19-077-10W6
Capacity: ~21 MMcf/d
Sour Compressor Station
02-10-077-12W6
Capacity: ~18 MMcf/d
August 14, 2019 30WATER STORAGE INFRASTRUCTURE
• Birchcliff has extensive
water storage
infrastructure in place to
support its completion
operations
• 920,000 m3 of water
storage at 10
strategically located
sites
• This volume provides
Birchcliff with the ability
to complete over 60
wells per year
August 14, 2019 31POUCE COUPE OVERVIEW
• Proven asset in development phase
• Wells show high initial deliverability,
low terminal decline and stable long
term production
• Predictable results with improving gas
rates & liquids yields
• 100% owned and operated
• The 2019 drilling program includes 12
(12.0 net) Montney/Doig horizontal
condensate-rich natural gas wells
including 9 Montney D1 gas wells, 2
Montney D2 gas wells and 1 Montney
C gas well
• No land expiry issues
August 14, 2019 32CONTINUED NATURAL GAS RATE
IMPROVEMENT
Continued significant gas rates
notwithstanding increased
condensate production
# OF WELLS
ONSTREAM:
2016 – 14
2017 – 37
2018 – 15
2019 – 14
Deloitte Tier 0 Type Curve
2018 Wells choked due to PC
Gas Plant being full
August 14, 2019 33CONTINUED CONDENSATE RATE
IMPROVEMENT
Birchcliff continues to target
condensate-rich natural gas wells in
Pouce Coupe, which has materially
impacted the amount of liquids
(primarily condensate) being produced
at the Pouce Coupe Gas Plant (3,272
bbls/d in 1H/19, a 52% increase from
1H/18).
# OF WELLS
ONSTREAM:
2016 – 14
2017 – 37
2018 – 15
2019 – 14
August 14, 2019 34POUCE COUPE 2019 LIQUIDS TYPE CURVE
4500
Rate of Return (%)
4000 WTI ($US/bbl)
$55/bbl $60/bbl $65/bbl
3500
Sales Gas Rate (Mcf/d)
$1.50/GJ 36% 41% 45%
AECO
$2.00/GJ 53% 58% 63%
3000 $2.50/GJ 72% 77% 83%
2500 NPV 10% ($MM)
2000 WTI ($US/bbl)
$55/bbl $60/bbl $65/bbl
1500 $1.50/GJ $4.1 $4.6 $5.1
AECO
$2.00/GJ $6.3 $6.8 $7.3
1000 $2.50/GJ $8.5 $9.0 $9.5
500 Payout (Years)
WTI ($US/bbl)
0
$55/bbl $60/bbl $65/bbl
0 20 40 60 80 100 120 $1.50/GJ 2.5 2.3 2.1
AECO
$2.00/GJ 1.9 1.7 1.6
Producing Time (Months)
$2.50/GJ 1.5 1.4 1.3
Tier 0 Production Summary Tier 0 Type Curve Inputs
Sales Gas C5+ Total Sales Raw Gas EUR Bcf 8.2
mcf/d bbl/d boe/d Sales EUR Mboe 1,499
IP30 3,870 90 735 Capped Rate (Sales) MMcf/d 3.9
IP90 3,870 90 735 CGR (C5+) bbl/MMcf 23.3
IP180 3,748 87 712 DCCET Capital $MM $4.70
IP360 3,230 75 614
*Assumptions: Fx 1.30 CAD/USD
*All economics are before tax; reference date is January 1, 2019
August 14, 2019 35SCIENCE & TECHNOLOGY PAD August 14, 2019 36
GORDONDALE OVERVIEW
• Acquired in 2016, Gordondale
consolidated a sizeable and
contiguous land base within
Birchcliff’s existing core area
• High oil & NGLs weighting
• Strategic infrastructure
• Low base decline production
• High quality development
opportunities including the addition of
a fourth commercial development
interval in the Montney D2
• The 2019 drilling program includes 12
(12.0 net) horizontal oil wells
including 7 Montney D2 oil wells and
5 Montney D1 oil wells
August 14, 2019 37GORDONDALE BASE PRODUCTION HISTORY
Last well drilled in 2014 (on-stream Birchcliff Scheduled
40,000 2015) with peak production of Acquisition AltaGas Plant
~35,000 boe/d (~22,000 BOE/d) Turnaround
35,000
2018
AltaGas Deep Cut Plant on 2017
30,000 stream October 2012 and
Montney oil pool development 2016
commenced
Production (boe/d)
25,000 2015
2014
Montney oil pool
20,000 discovered in 2010
2013
15,000 Horizontal gas 2012
development in late
2000s 2011
10,000 2010
2009
5,000
2008 & Earlier
0
August 14, 2019 38GORDONDALE 2019 D1 & D2 OIL TYPE CURVES
D1 Tier 1 Type Curve D2 Tier 1 Type Curve D2 Tier 1 - Rate of Return (%)
WTI ($US/bbl)
450 $55/bbl $60/bbl $65/bbl
$1.50/GJ 69% 87% 106%
400
AECO
$2.00/GJ 81% 99% 119%
350 $2.50/GJ 93% 113% 134%
Oil Rate (bbl/d)
300 D2 Tier 1 - NPV 10% ($MM)
250 WTI ($US/bbl)
$55/bbl $60/bbl $65/bbl
200 $1.50/GJ $5.2 $6.3 $7.3
AECO
150 $2.00/GJ $6.1 $7.1 $8.1
$2.50/GJ $6.9 $8.0 $8.9
100
50 D2 Tier 1 - Payout (Years)
WTI ($US/bbl)
0 $55/bbl $60/bbl $65/bbl
0 20 40 60 80 100 120 $1.50/GJ 1.3 1.1 1.0
AECO
$2.00/GJ 1.2 1.0 0.9
Producing Time (Months) $2.50/GJ 1.1 0.9 0.8
D2 Tier 1 - Production Summary D1 & D2 Tier 1 Type Curve Inputs
Oil Sales Gas C2+ Total Sales D1 Tier 1 D2 Tier 1
bbl/d mcf/d bbl/d boe/d Raw Gas EUR Bcf 4.3 3.3
IP30 419 3,731 313 1354 Oil EUR Mbbl 279 240
IP90 328 3,115 262 1109 Sales EUR Mboe 1,175 918
IP180 259 2,568 216 902 CGR (C2+) bbl/MMcf 84.0 84.0
IP360 191 1,980 166 687 DCCET Capital $MM $5.50 $5.50
*Assumptions: Fx 1.30 CAD/USD
*All economics are before tax; reference date is January 1, 2019
August 14, 2019 392017 LIQUIDS SUMMARY 2017 Well Rates (IP60 Avg. Per Well)
BUILDING ON THE GORDONDALE
ACQUISITION
GORDONDALE: CRUDE OIL
• Excellent Lower Montney oil inventory in
D1 and D2 intervals
• Engineered completions drive recovery
factor improvements
• EOR scheme under evaluation
POUCE COUPE: CONDENSATE (C5+)
• 2017 well results demonstrate condensate
rich multi-zone potential with excellent
economics (IP60)
• Montney D1: 120-240 bbls/d
• Montney D4: 180 bbls/d
• Basil Doig/Upper Montney: 110-140
bbls/d
• 2018 program is expected to extend
condensate rich fairways and improve
individual well CGRs through Engineered
Completions
August 14, 2019 402018 LIQUIDS SUMMARY 2018 Well Rates (IP60 Avg. Per Well)
FURTHER REFINING OUR LIQUIDS
STRATEGY
GORDONDALE: CRUDE OIL
• Strong Montney D2 oil and total boe test rates
• Strong Montney D1 oil and total boe test rates
• Further refinements of engineered completions
having positive results
POUCE COUPE: CONDENSATE (C5+)
• Strong Montney D1 gas condensate and total boe
test rates
• Successfully delineating the Montney D1
condensate fairway
• Montney D1 well economics attractive at current
strip gas prices due to high rate gas, high value
condensate
POUCE COUPE: SCIENCE & TECHNOLOGY
PAD
• Vertical well evaluation and learnings
• Exploration success Montney D2, 49 bbls/MMcf
CGR
• New Engineered Completion success Montney C
• Continued delineation of the Montney D1
condensate fairway
August 14, 2019 412019 LIQUIDS SUMMARY 2019 Well Rates (Rates are IP60 or noted by pad)
CONTINUED PURSUIT OF
INCREASED LIQUIDS
GORDONDALE: CRUDE OIL
• Successful delineation of the Montney D1 and D2
oil trends to the south
• Significant Montney D1 and D2 results offsetting
recent land acquisition
• Lower GOR areas identified, which will yield higher
oil recovery
POUCE COUPE: CONDENSATE (C5+)
• Successful delineation of the Montney D1
condensate rich trend to the south
• Initial productivity was choked to manage liquids
production
• Step change in CGR compared to offsetting wells,
utilizing Birchcliff’s most recent completion design
POUCE COUPE GAS PLANT
• Birchcliff has commenced the engineering and
planning of a 20,000 bbls/d liquids handling hub at
the PC Plant (anticipated completion in Q3/2020).
This will allow Birchcliff to grow its condensate
production in Pouce Coupe to 10,000 bbls/d
August 14, 2019 42ELMWORTH DEVELOPMENT
• Received regulatory approval for an Second
Exploration
acid gas injection well in August 2016 Horizontal
• Preliminary planning underway for a
100% owned and operated 40
MMcf/d natural gas processing plant;
currently expected to be operational
in the fall of 2022
First
• Drilled two successful exploration Exploration
Approved Acid Horizontal
horizontal wells into the Montney D4 Gas Injection
interval, both of which are expected Well
to result in follow up drilling and
significant future reserve additions
• Will leverage over 14 years of
Montney experience
August 14, 2019 43CONCEPTUAL MONTNEY/DOIG FIELD
DEVELOPMENT MODEL
STATUS OF MODEL CALIBRATION AND DERISKING
FACIES & PETROPHYSICAL GEOLOGICAL, GEOPHYSICAL, GEOMECHANCAL HYDRAULIC FRAC & MICRO SEIS. RESERVOIR MODEL OPTIMIZED DCC & PRODUCTION
BASAL DOIG / D5 T1
D4 T2
D3
D2 >T0
D1 >T0
C >T4
August 14, 2019 44POUCE COUPE DRILLING PERFORMANCE
2018 2018
2017 2017
2016 2016
August 14, 2019 45POUCE COUPE LOWER MONTNEY (D1) CORE
AREA COMPLETION EVOLUTION
Completion Parameter 2013 2014 2015 2016 2017 2018
Completion Fluid (# of Wells) X-linked/MVP (24) X-linked/MVP (37) SLW (30) SLW (14) SLW (59) SLW (28)
Lateral Length (m) 1,700 1,929 1,983 2,074 2,276 2,154
Number of Stages (#) 14 17 17 19 35 39
Interfrac Spacing (m) 127 121 123 117 79 59
Technology Open Hole Ball Drop Open Hole Ball Drop Open Hole Ball Drop Open Hole Ball Drop Open Hole Ball Drop Open Hole Ball Drop
Tonnage (t) 74 68 75 75 65 67
Proppant Intensity (t/m) 0.61 0.59 0.63 0.68 0.92 1.24
August 14, 2019 46ENGINEERED COMPLETIONS FOR
MONTNEY/DOIG FULL FIELD DEVELOPMENT
Industry Range Birchcliff Best Practices Oil Birchcliff Best Practices Gas
Liner type Openhole or Cemented Openhole or Cemented Openhole or Cemented
Inter-well spacing 100 – 400 m (300 – 1,200 ft) 200 m (600 ft) 300 m (900 ft)
Inter-frac spacing 20 – 150 m (60 – 450 ft) 50 – 100 m (150 – 300 ft) 50 m (150 ft)
Stages 20 – 120 25 – 50 45
Proppant 0.5 – 6.0 tonne/m (335 – 4,023 lb/ft) 1.0 – 1.5 tonne/m (670 – 1,005 lb/ft) 1.0 tonne/m (670 lb/ft)
Fluid CO2, N2, Hybrid, Slickwater Slickwater Slickwater
Pump Rate 2 – 12 m3/min (12 – 75 b/m) 6 – 10 m3/min (37 – 62 b/m) 6 – 10 m3/min (37 – 62 b/m)
Avg. Lateral Length 1,500 – 4,000 m (4,500 – 12,000 ft) 2,500 m (8,200 ft) 2,300 m (7,500 ft)
Estimated DCCET $4.0 - $13.0 million $5.5 million(1) $4.7 million(2)
C* - Approximately $8.0 million Approximately $7.8 million
(1) Estimated by McDaniel. Based on actual costs incurred in 2018 and go forward DCCET costs.
(2) Estimated by Deloitte. Up slightly compared to 2017 due to increased frac intensity in completions.
August 14, 2019 47You can also read
