Corporate Presentation
June 2017
Important Notices to the Readers
This presentation should be read in conjunction with the Company's audited consolidated financial statements, management's
discussion and analysis ("MD&A") for the three months ended March 31, 2017. All dollar amounts contained in this presentation are
expressed in millions of Canadian dollars unless otherwise indicated.
Certain financial measures included in this presentation do not have a standardized meaning prescribed by International Financial
Reporting Standards (“IFRS”) and therefore are considered non-generally accepted accounting practice ("non-GAAP") measures;
accordingly, they may not be comparable to similar measures provided by other issuers. This presentation also contains oil and gas
disclosures, various industry terms, and forward-looking statements, including various assumptions on which such forward-looking
statements are based and related risk factors. Please see the Company's disclosures located in the Appendix at the end of this
presentation for further details regarding these matters.
pennwest.com | TSX: PWT NYSE: PWE
2
Penn West Corporate Profile
TSX: PWT NYSE: PWE
Share Price
$/share
$1.79
*June 8, 2017
PWT Daily Volume (shares)
MM
% of Shares Outstanding
0.4%
PWE Daily Volume (shares)
MM
% of Shares Outstanding
Value of $100 Investment
$250
2.0
1.6
0.3%
Market Capitalization
$MM
$902
Long Term Debt
$MM
$384
Enterprise Value
$MM
$1,286
Performance of PWT vs. Energy Index
$200
$150
$100
$50
Penn West (PWT)
$0
Jan '16
Mar '16
pennwest.com | TSX: PWT NYSE: PWE
May '16
Energy Index (XEG)
Jul '16
Sep '16
Nov '16
Jan '17
Mar '17
May '17
3
What a Difference 4 Years Have Made
Penn West circa 2013
Obsidian Energy
30/5.5
3/1.7
operating areas/
million net acres
operating areas/
million net acres
~135,000
~31,000
boe/d
boe/d
24
2.5
floors
floors
15
5
executives
executives
2,000
300
employees
employees
15
4
field offices
field offices
What Obsidian Energy Means to Us
The name honours that our foundation is a natural resource that is honed to support the
good of mankind. To us, the name, Obsidian Energy, reflects that we will build a bright
future shaped by discipline and precision; our Company will be intentional and professional
in everything we do.
Disciplined
Technically and commercially guided by
clear purpose and intention, with focused
resources and capability to act and learn
Relentless
Passionately driven to meet our goals
and deliver meaningful results
Accountable
Deeply committed to one another, our
shareholders, our partners, and our
neighbours to be the company of choice
Why Invest in Penn West?
Balanced Portfolio
Liquids-weighted assets with
a mix of short-cycle and midcycle opportunities
Solid Balance Sheet
Successful 2016
deleveraging;
Debt to FFO ~2.0x
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Organic Production
Growth
Self-funded double digit
production growth with a
low-decline advantage
Leading Costs and
Cash Flow Generation
Competitive operating and
capital efficiencies to
generate Free Cash Flow
6
Balanced Portfolio
Liquids-Focused Growth Company
2017 plan for self-funded double-digit production growth
2017 hedged ~50% of oil at
~US$51 WTI and ~30% of
gas at ~C$2.90 AECO
Peace
River
90 kms
56 miles
Manufacture Cold Flow
in Peace River
Net Sections:
Production:
Netback*:
90 kms
56 miles
Index Map
235
4,648 boe/d
~$27/boe
*Net of carried operating costs
Build Cardium
Waterflood Platform
Net Sections:
Production:
Netback:
Q1 2017
Production
Cardium
4,648
Alberta Viking
2,638
Legacy
4,445
Sold & Held for Sale
Total Penn West
Cardium
Leverage Infrastructure
with Viking Prospects
Net Sections:
Production:
Netback:
150 kms
95 miles
18,603
Peace River
Key Areas
450
18,603 boe/d
~$26/boe
125 kms
80 miles
30,334
4,566
34,900
~700 Net Sections in
Secondary Horizons
pennwest.com | TSX: PWT NYSE: PWE
Alberta
Viking
39 kms
24 miles
Pursue New Ventures
170
2,638 boe/d
~$27/boe
87 kms
54 miles
Penn West land
7
Balanced Portfolio
2017 Corporate Themes
Activity Details
Injectors
Budget ($MM)
Producers
55
45
10
Strat
31
7
Build Cardium Cardium Waterflood
Waterflood Platform Platform
Cardium Waterflood
Platform
$97
Producers
Manufacture
Cold Flow
24
Operated
Non-Op
15 4
11
Manufacture Cold Flow Manufacture
Cold Flow
in Peace River
Leverage Infrastructure with
Leverage
Viking Infrastructure
Viking Prospects
Leverage
Viking Infrastructure
$8
$15
Additional 4 operated wells
added to H2 program
Operated
Non-Op
7 43
Pursue
New Ventures
Pursue New Ventures NewPursue
Ventures
Production reliability: ongoing
maintenance, repairs, and optimization
Base
Decommissioning, abandonment, and
environmental stewardship
Decommissioning
45
8
47
Operated Non-Operated Operated
Injectors
Producers Producers
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Base
Base
DecommissioningDecommissioning
TOTAL
$15
$25
$20
$180 MM
Budget Spend
8
Balanced Portfolio
Low Decline Cash Flow Advantage
$35
Illustrative
Quarterly NOI per $100 Invested ($)
Year 5 NOI vs Year 1 NOI (%)
70%
$30
60%
50%
40%
$25
30%
20%
$20
10%
0%
Viking
Mannville
$15
W. Green
Type I
Peace River
Pembina
Type I
$10
$5
$0
Year 1
Year 2
Pembina Type I
W. Green Type I
Note: WTI - US$52/bbl in Year 1, US$53/bbl in Year 2, escalating through Year 5
AECO - C$2.90/Mcf in Year 1, C$2.65/Mcf in Year 2, escalating through Year 5
pennwest.com | TSX: PWT NYSE: PWE
Year 3
Viking
Year 4
Mannville
Year 5
Peace River
9
Balanced Portfolio
Resilient Assets in Volatile Commodity Prices
$3.00
WTI (US$/bbl) and AECO (C$/Mcf) Required for 10% IRR (Break-even)
Illustrative
Current Prices @
~US$48/C$2.75
Break-evens
lower than
current prices
$2.50
Cardium Type I break-even WTI price
~US$35/bbl with very little impact from gas
prices
AECO (C$/Mcf)
Peace River break-even WTI price ~US$35/bbl
with zero impact from gas prices
Viking break-even WTI pricing ~US$41/bbl at
current gas price with medium torque to oil
and gas
$2.00
Mannville break-even AECO pricing ~C$1.60 at
current oil price with high torque to gas and
medium torque to oil
$1.50
Mannville
Peace River
AB Viking
Pembina Type I
W. Green Type I
$1.00
$30.00
$35.00
$40.00
$45.00
$50.00
$55.00
$60.00
WTI (US$/bbl)
pennwest.com | TSX: PWT NYSE: PWE
10
Organic Production Growth
Focus on 2017 and 2018 Sustainability
Near Term Price
Consideration
2017
2018
Double Digit Growth
Maintain Production
i.e. US$45 / C$2.50
Reduce Cash Outlays
Self-fund $180 million Capital
Program
2017 & 2018
Development
Scenarios
2017– 2021
5 Year Plan
Scenarios
▪ Minimal Non-Productive Spend i.e.
facilities for future growth, enviro
▪ Fewer injectors in near term
▪ Focus on optimization
▪ Expect vendor savings
US$50/C$2.75
US$55/C$3.00
US$60/C$3.25
FFO CAGR (%)
3%
12%
17%
Production CAGR (%)
3%
9%
13%
100%
100%
100%
Re-Investment Rate (%)
Target Self Funded Development in all Commodity Price Scenarios
pennwest.com | TSX: PWT NYSE: PWE
11
Organic Production Growth
The Cardium is Our Foundation
R5
R10W5
PENN WEST LAND
PENN WEST PRODUCING WELL
INJECTOR
▪ More acreage than the 2nd and
3rd largest land holders combined
POR >8%, PERM >0.2mD
BEST QUALITY RESERVIOR
INDUSTRY HZ WELL
CARDIUM TREND
PEMBINA
T50
J Lease
PCU #11
NPCU #1
(Former PWT)
▪ Low decline, light-oil, with FCF of
$70MM and growing
PCU #9
15 kms
▪ De-risked position with 2.5 - 3
billion bbls OOIP in the sweet spot
of the reservoir
WILLESDEN
GREEN
Boundary for lands with
Porosity > 8% and
Permeability > 0.2mD
T45
Key Metrics
10 miles
INDEX MAP
Crimson Lake
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▪ Waterflood recovery potential with
in the core part of the play is up to
3x that of “halo” regions
T41
Land
Production
% Liquids
Netback
2P Reserves
Decline Rate
450 sections
18,603 boe/d
64%
$26/boe
102 MMboe
15%
12
Organic Production Growth
Cardium is a Free Cash Flow Machine
▪ High-netback light-oil production
creates an engine of Free Cash Flow
Cardium 5 Year Plan ($MM)
NOI
Capital Spend
Free Cash Flow
$300
•
~$70MM of FCF in 2017 increasing to
~$100MM in 5 years
•
Funds higher-rate growth in Peace River,
Viking, and New Ventures
$225
$150
$100
$70
▪ Low-decline production creates a
stable base
•
$75
Less capital required to maintain and
grow corporate production volumes
$0
▪ 5 year Cardium plan demonstrates
($75)
($150)
($225)
US$55 WTI
C$3.00 AECO
2017
2018
pennwest.com | TSX: PWT NYSE: PWE
2019
2020
•
7% FCF growth CAGR
•
10% NOI growth CAGR
•
5% production growth CAGR
2021
13
Organic Production Growth
Tremendous Potential with Consistent Injection
120%
In areas where waterfloods were
maintained, recovery factors >35%
and high watercuts show success of
waterfloods
100%
Bear Lake
A Lease
NPCU #1
Lobstick
Easyford
Carrot Creek
Watercut (%)
80%
Majority of PWT’s positions are
in areas where waterfloods have
been inconsistent or neglected
60%
D Lease
F Lease
Open Creek
G Lease
Estimated ~1.5 billion barrels
OOIP in areas where RF < 20%
Large expected gain in recovery
factors along the “S” curve on
sizeable oil in place with application
of waterflood approach
Rose Creek
NWPCU #1
J Lease
Paddy Creek
40%
Faraway
PCU #9
Crimson Lake
20%
PCU #11
Lodgepole
0%
0%
5%
10%
Note: size of bubble denotes OOIP
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15%
20%
25%
30%
35%
40%
45%
Recovery Factor (%)
14
Organic Production Growth
Four Cardium Development Types
TYPE I
Hz Producers, Vert Injectors
A pattern is made up of
one horizontal producer
that is supported by 3
vertical water injectors
TYPE II
Hz Injector Conversions
Convert existing horizontal
producers to injection
~5-10% of
Cardium developed
With Type II
~80-85% of
Cardium developed
with Type I
TYPE III
Vertical Infill Producers/Injectors
TYPE IV
No Infill/Opt Existing WF
Reactivate injector
Infill drilling of vertical
producers or injectors to
complete patterns
Optimize producer
Re-frac injector
~5% of Cardium
developed with
Type III
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~5% of Cardium
developed with
Type IV
Stimulate injector
15
Organic Production Growth
Pembina Integrated Development Details
160
Development focused on “Type
I” patterns made up of Hz
producers and 3 Vt injectors
Response in 6-9 months with an
initial increase followed by
much lower decline
140
Production (bbl/d)
120
Majority of development in
Pembina will be Type I
100
80
Type II and Type III will be
used on a case by case basis
to optimize specific patterns
Primary only
declines rapidly
60
40
20
0
18
24
30
Months on Production
36
Inputs
Cost ($MM) - 1 Hz + 3 Vt injectors
Incremental Water Cost ($/bbl water)
Total Cost
$6.3
$0.20
Production
EUR
IP(30 day)
IP(365 day)
Liquids (%)
BOE (boe)
530,000
185
150
500
450
450
400
350
300
260
250
200
$6.1
1.0
35%
150
3.1
$42,000
$11.80
0
100
70
Total
Inventory
Type III & IV
Type II
Type I
Identified
Inventory
50
Type III & IV
Note: WTI - US$52/bbl in 2017, US$53/bbl in 2018, escalating through 2021
AECO - C$2.90/Mcf in 2017, C$2.65/Mcf in 2018, escalating through 2021
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Type I ~80%
Type II ~5%
Type III & IV ~15%
Type II
Payout (years)
Capital Efficiency ($/boe/d)
F&D ($/boe)
Pembina Inventory (# patterns)
Type I
Economic Outputs
NPV (10%) ($MM)
PIR (10%)
IRR (%)
48
Total
5 Year Plan
Liquids (bbl)
470,000
150
125
89%
42
Type III & IV
12
Type II
6
Type I
0
16
Organic Production Growth
Willesden Green Integrated Development Details
Development focused on “Type
I” patterns made up of Hz
producers and 3 Vt injectors
350
300
Production (bbl/d)
250
Majority of Willesden Green
will be developed using Type I
Integrated waterflood approach
results in lower declines from day 1
200
150
Southern portion of Crimson
will be developed using Type
II due to tight-spacing on
existing infill wells
100
Primary only
declines rapidly
50
0
36
42
Total Cost
$6.5
$0.20
Production
EUR
IP(30 day)
IP(365 day)
Liquids (%)
BOE (boe)
545,000
340
265
60
300
Type I ~85%
Type II ~10%
Type IV ~5%
200
150
120
100
50
Note: WTI - US$52/bbl in 2017, US$53/bbl in 2018, escalating through 2021
AECO - C$2.90/Mcf in 2017, C$2.65/Mcf in 2018, escalating through 2021
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Total
Inventory
Type IV
Type II
Type I
2.5
$24,500
$11.95
Type I
50
Identified
Inventory
$5.0
0.8
35%
0
Payout (years)
Capital Efficiency ($/boe/d)
F&D ($/boe)
250
250
Type IV
Economic Outputs
NPV (10%) ($MM)
PIR (10%)
IRR (%)
54
Willesden Green Inventory (# patterns)
Inputs
Cost ($MM) - 1 Hz + 3 Vt injectors
Incremental Water Cost ($/bbl water)
Liquids (bbl)
435,000
295
200
80%
48
Type II
24
30
Months
Type I
18
Total
5 Year Plan
12
Type IV
6
Type II
0
17
Organic Production Growth
Signpost Demonstration in Crimson Lake
Crimson Section 01-042-08W5 Waterflood Project
Hall Plot
2
10,000
100,000
1.4
Oil (bbl/day)
1.2
Cum Pressure Differential
Injected Water (bbl/day)
GOR (scf/bbl)
1,000
3
1
0.8
0.6
0.4
0.2
10,000
0
0
2
4
6
8
Rate (bbl/day)
GOR (scf/bbl)
Cum Injection Volume
100
1,000
4
1 Injection start
Injection shut in for WF
infrastructure upgrades
10
100
Production doubled after 12 months and no water break through
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18
Organic Production Growth
Manufacturing Cold Flow in Peace River
R20W5
R15
▪
Large contiguous position in a crude oil resource
highly amenable to conventional cold-flow
production
▪
JV partner funds 90% of capital and operating
expenses; PWT operated 55% working interest
PennWest 55% Ownership
Nampa
Seal North T85
Harmon Valley
Cadotte
Harmon Valley
West
Harmon Valley
South
▪
Seal
Seal West
T80
•
Carried capital expected to finish by yearend
•
Attractive economics “post carry”
>10 years of inventory with 255 identified
locations
•
Plan to drill ~100 locations in next 5 years
•
Recent tuck-in acquisition of ~40 near-term
locations
Reno
Key Metrics
INDEX MAP
15 kms
PENN WEST LAND
ACQUIRED LAND in 2017
10 miles
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PROP AMI
Land
Production
% Liquids
Netback
2P Reserves (net)
235 sections
4,648 boe/d
99%
$27/boe
12 MMboe
19
Organic Production Growth
Peace River Economics, excluding benefit of JV carry
250
200
Drill + Complete
$1.6
Total DCET
$2.8
Production
EUR
IP(30 day)
IP(365 day)
Liquids (bbl)
310,000
205
195
BOE (boe)
400,000
215
210
Economic Outputs
NPV (10%) ($MM)
PIR (10%)
IRR (%)
150
Production (boe/d)
Inputs
Cost ($MM)
$2.6
0.9
50%
Payout (years)
Capital Efficiency ($/boe/d)
F&D ($/boe)
100
2.6
$13,500
$7.00
50
0
0
6
12
18
24
30
36
42
48
Months on Production
Note: Economics exclude the benefit of the carried capital and opex
Associated gas production will only be captured beginning in Sep 2018
WTI - US$52/bbl in 2017, US$53/bbl in 2018, escalating through 2021
AECO - C$2.90/Mcf in 2017, C$2.65/Mcf in 2018, escalating through 2021
pennwest.com | TSX: PWT NYSE: PWE
20
Organic Production Growth
Leverage Infrastructure with Viking Prospects
R10
R5
Misty GP
▪ Large contiguous land position
criss-crossed and de-risked by
peer activity
R1W4
Compeer GP
T35
▪ Light-oil, high netback shorter
cycle wells
▪ >300 total locations with plan to
develop ~40 over next 5 years
Monitor West GP
Esther GP
T30
▪ Infrastructure advantage ~18
MMcf/d of gas processing capacity
Key Metrics
PENN WEST GAS PLANT
PENN WEST LAND
TAMARACK VALLEY
INDEX MAP
RAGING RIVER
HIGH GROUND ENERGY
ROLLING HILLS
15 kms
10 miles
pennwest.com | TSX: PWT NYSE: PWE
T25
Penn West Royalties denoted in
solid colours
Land
Production
% Liquids
Netback
2P Reserves
170 sections
2,638 boe/d
55%
$27/boe
2 MMboe
21
Organic Production Growth
Top Drilling Results from 2016 Viking Campaign
200
PWT 2016 – 1 mile – 11 wells
PWT pre-2014 – 1 mile EQ – 11 wells
PWT 2016
Drilling Program
180
Peer 1 – 1 mile EQ – 61 wells
Peer 2 – 1 mile EQ – 17 wells
160
140
120
Production (boe/d)
100
Peer 1
80
Peer 2
60
40
20
0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
Months on Production
~60% performance increase from PWT legacy Viking wells
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22
Organic Production Growth
High Rate Alberta Viking Economics
200
Alberta Viking Economics
180
160
140
Drill + Complete
$1.1
Total DCET
$1.5
Production
EUR
IP(30 day)
IP(365 day)
Liquids (%)
Liquids (bbl)
38,000
110
55
51%
BOE (boe)
75,000
175
95
Economic Outputs
NPV (10%) ($MM)
PIR (10%)
IRR (%)
120
Production
Inputs
Cost ($MM)
$0.7
0.4
50%
Payout (years)
Capital Efficiency ($/boe/d)
F&D ($/boe)
100
1.7
$15,500
$20.00
80
60
40
20
0
1
7
13
19
25
31
37
43
49
Months on Production
Total Production (boe/d)
Liquids Production (bbl/d)
Note: WTI - US$52/bbl in 2017, US$53/bbl in 2018, escalating through 2021
AECO - C$2.90/Mcf in 2017, C$2.65/Mcf in 2018, escalating through 2021
pennwest.com | TSX: PWT NYSE: PWE
23
Organic Production Growth
Pursue New Ventures
F OR M A T ION
R8W5
▪ On track to drill 3 operated wells
in Willesden Green in Q3/17
R5
PENN WEST LAND
BELLY RIVER
PENN WEST OPERATED CARDIUM UNIT
COLORADO SHALE
CARDIUM TREND
PENN WEST 2017 UPPER MANNVILLE WELL
SPIR IT
R IVER
COLORADO SHALE
M A N N VILLE
C R ETA C EOU S
CARDIUM
ANALOGUE UPPER MANNVILLE PRODUCER
NOTIKEWIN
FALHER
WILRICH
GLAUCONITIC
SANDSTONE
•
Targeting Upper Mannville zone
•
High-impact liquids-weighted
production potential
OSTRACOD BEDS
ELLERSLIE
TVE 4-13-45-7
Falher B
IP30: 3.2 MMcf/d
FERNIE SHALE
ROCK CREEK
FERNIE SHALE
BXE 16-36-44-7
Falher B
IP30: 5.2 MMcf/d
NORDEGG
BXEFERNIE
13-16-44-9
SHALE
Falher C
IP30: 6.8 MMcf/d
Falher B
Trend
BXE 16-10-44-9
Falher E
IP30: 5.0 MMcf/d
TQN 4-5-44-9
Falher D
IP30: 7.1 MMcf/d
T45
BXE 16-25-43-8
Falher B
IP30: 6.8 MMcf/d
WILLESDEN
GREEN
Crimson
Gas Plant
▪ Production volumes to be
processed in PWT operated
Crimson gas plant
•
Infrastructure has available capacity
and firm service
•
Flexibility to handle both low and
high pressure volumes
•
Improved economics due to low
processing costs
Open Creek
Main Upper Mannville
Industry Activity Trend
Faraway
INDEX MAP
Crimson Lake
10 kms
T40
5 miles
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▪ 40 locations in 5 year plan
targeting Upper Mannville, Lower
Mannville and Jurassic
•
>200 identified locations
24
Organic Production Growth
Mannville Fahler B Type Curve and Offsetting Wells
8,000
Type Curve (Mcf/d)
16-25-43-8 offset
16-36-44-7 offset
7,000
4-13
6,000
16-36
Inputs
Cost ($MM)
Drill + Complete
$3.0
Total DCET
$4.0
Production
EUR
IP(30 day)
IP(365 day)
Liquids (%)
Liquids (bbl)
140,000
230
130
19%
BOE (boe)
720,000
1,030
620
16-25
Economic Outputs
NPV (10%) ($MM)
PIR (10%)
IRR (%)
5,000
Gas Production (Mcf/d)
4-13-45-7 offset
$3.4
0.9
60%
Payout (years)
Capital Efficiency ($/boe/d)
F&D ($/boe)
1.5
$6,500
$5.50
4,000
3,000
2,000
1,000
0
0
6
12
Note: WTI - US$52/bbl in 2017, US$53/bbl in 2018, escalating through 2021
AECO - C$2.90/Mcf in 2017, C$2.65/Mcf in 2018, escalating through 2021
pennwest.com | TSX: PWT NYSE: PWE
18
24
30
36
42
48
Months on Production
25
Organic Production Growth
Waterfloods Maintain Low Decline While Growing
30%
Average current peer decline rate ~28%
28%
Higher growth scenario not expected
to materially increase decline rate
26%
5YP @
US$60/C$3.25
24%
5YP @
US$55/C$3.00
2021 Corporate Decline (%)
22%
~52%
of spend
in Cardium
Current corporate decline rate ~20%
20%
~53%
of spend
in Cardium
5YP @ US$50/C$2.75
18%
~9% self-funded growth maintains
current corporate decline rate
~56%
of spend
in Cardium
16%
Lower price scenarios show
modest growth while lowering
current corporate decline rate
14%
12%
Note: Size of bubbles indicates total development capital spend by area
10%
0%
5%
10%
15%
5 Year Growth CAGR (%)
pennwest.com | TSX: PWT NYSE: PWE
26
Solid Balance Sheet
Major 2016 Restructuring Now Complete
Long Term Debt Reduction since YE 2015 ($MM)
$1,940
($1,392)
($79)
YE 2015
Dispositions
FX & Other
$469
($70)
YE 2016
A&D Closed
Discounted Asset Retirement Obligations ($MM)
$397
($15)
$384
FCF & Other
Q1 2017
Well Count (#)
13,200
$181
4,900
YE 2015
Wells
pennwest.com | TSX: PWT NYSE: PWE
YE 2015
Q1 2017 PF
Pipelines
Facilities
Q1 2017 PF
Producing
Injecting
Inactive
27
Leading Cost Structure and Cash Generation
Strong Hedge Position
▪ Corporate forecasting and hedging program extends six quarters
▪ Allows for planning and line of sight past each Spring breakup cycle
▪ Increases confidence for self-funded growth down to WTI prices of ~US$40 per bbl
Oil Volumes Hedged (bbl/d)
Gas Volumes Hedged (Mcf/d)
~30% of Net Gas Volumes Hedged for FY 2017
~50% of Net Oil Volumes Hedged for FY 2017
20,900
7,900
7,800
19,000
7,400
19,000
19,000
7,000
13,300
7,600
3,000
5,700
1,000
50.70
US$/bbl
50.70
US$/bbl
50.91
US$/bbl
51.39
US$/bbl
53.30
US$/bbl
53.50
US$/bbl
2.81
C$/Mcf
2.84
C$/Mcf
3.00
C$/Mcf
2.97
C$/Mcf
2.83
C$/Mcf
2.80
C$/Mcf
2.84
C$/Mcf
Q2
Q3
Q4
Q1
Q2
Q3
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2017
pennwest.com | TSX: PWT NYSE: PWE
2018
2017
2018
28
Leading Cost Structure and Cash Generation
Improved Margins with a Focused Portfolio
~$19-21
Cash Margins (C$/boe)
$5.38
$15.92
$6.39
$17.88
Strong Q1 2017 Cash Margins ($/boe)
in Key Development Areas
29% opex
savings
vs 2015
$26
$27
$27
$2.97
Avg. $22/boe
($1)
Cardium
2015
Net Sales Price
Royalties
Operating
Costs
2016
Peace River
Alberta Viking
Legacy
2017E
* Based on WTI between US$50 and US$55 per bbl and AECO of C$3.00 per Mcf
pennwest.com | TSX: PWT NYSE: PWE
29
Leading Cost Structure and Cash Generation
Margins Are An Excellent Engine for Cash
Implied FX Rate
(CAD/USD) 1.325
Oil & Gas Hedging
OPEX
Royalties
Transportation
Netback Incl. Hedging
All numbers are C$/boe
$13.50
$1.75
$1.25
$13.25
$15.75
$1.75
$1.50
$17.50
$1.75
$2.00
$21.25
$24.25
$1.75
$1.75
$2.50
$1.75
$3.00
$1.75
$3.75
$13.25
$13.25
$13.25
$13.25
($1.50)
($3.00)
($4.50)
$4.75
$13.25
$13.25
$4.75
$19.25
$23.00
$3.25
$1.50
US$35
US$40
US$45
US$50
US$55
US$60
US$65
Implied C$ Ed Par
$41.75
$48.50
$55.00
$61.50
$68.25
$74.75
$81.50
Implied C$ Liquids
Realization
$29.75
$36.25
$43.00
$49.50
$56.25
$62.75
$69.50
$46.25
$50.25
Assumes illustrative 62% liquids and 38% natural gas production with constant ~C$3.00 AECO
Implied C$
Portfolio
Realization
$25.50
pennwest.com | TSX: PWT NYSE: PWE
$29.75
$34.00
$38.00
$42.00
30
Penn West Management
pennwest.com | TSX: PWT NYSE: PWE
David French
Andrew Sweerts
President and
Chief Executive Officer
VP, Production &
Technical Services
David Hendry
Mark Hodgson
Chief Financial Officer
VP, Business Development &
Commercial
Tony Berthelet
Robert Wood
VP, Development &
Operations
General Counsel
31
Appendix: Five Year Plan
The Tenets of our Five Year Plan
Organic
Production
Growth
Self Funded
Capital
Spending
Commodity
Pricing
pennwest.com | TSX: PWT NYSE: PWE
▪
Competitive growth profile through the drill-bit
▪
Cardium is the foundation with modest growth and high FCF
▪
Shorter-cycle projects to toggle growth as needed
▪
Targeting ~100% re-investment rate in 2018+ towards growth
▪
Determine portfolio capital allocation based on next 6
quarters of commodity pricing
▪
Current plan is based on US$55/bbl WTI and C$3.00/Mcf
AECO; analysis shown on alternative WTI scenarios
▪
Continue to layer on 6 quarters of rolling hedges to protect
downside and de-risk economics
33
Power of the Portfolio Drives Balanced Growth
Gas Price
2017-2021
US$50/C$2.75
US$55/C$3.00
US$60/C$3.25
FFO CAGR (%)
3%
12%
17%
Production CAGR (%)
3%
9%
13%
100%
100%
100%
Oil Price
Re-Investment Rate (%)
PWT Normalized Free Cash Flow ($MM)
PWT Production Profile (boe/d)
Total Capital Expenditures Incl. Enviro
Funds Flow from Operations
Corporate FCF
US$50/C$2.75 FCF
$400
Base
2019
US$50/C$2.75
2017
2020
2018
2021
50,000
$300
45,000
40,000
$200
35,000
$100
30,000
25,000
$0
20,000
($100)
15,000
10,000
($200)
($300)
5,000
US$55 WTI
C$3.00 AECO
2017
0
2018
2019
pennwest.com | TSX: PWT NYSE: PWE
2020
2021
US$55 WTI
C$3.00 AECO
2017
2018
2019
2020
2021
34
Cardium Optionality In All Environments
▪ Free Cash Flow to fund shorter-cycle projects in Peace River,
Viking, and New Ventures
Gas Price
▪ Integrated waterflood to allow for modest growth and reduction
of declines
Oil Price
▪ Results in more capital being available to fund growth rather
than base decline mitigation
Asset Level Free Cash Flow ($MM)
NOI
Production Profile (boe/d)
Base
2019
US$50/C$2.75
Total Capital excl. Enviro
$300 Asset FCF
US$50/C$2.75 FCF
2017
2020
2018
2021
25,000
$225
20,000
$150
$75
15,000
$0
10,000
($75)
5,000
($150)
($225)
US$55 WTI
C$3.00 AECO
2017
0
2018
pennwest.com | TSX: PWT NYSE: PWE
2019
2020
2021
US$55 WTI
C$3.00 AECO
2017
2018
2019
2020
2021
35
Manufacture Cold Flow in Peace River
▪ Attractive economics remain after JV carry finishes in 2017
Gas Price
▪ 5 year plan of ~12% production growth CAGR with ~80%
sustainability ratio
Oil Price
Asset Level Free Cash Flow ($MM)
NOI
Total Capital excl. Enviro
Asset FCF
US$50/C$2.75 FCF
Production Profile (boe/d)
Base
2019
10,000
2017
2020
2018
2021
$50
9,000
8,000
$25
7,000
6,000
5,000
$0
4,000
3,000
($25)
($50)
2,000
1,000
US$55 WTI
C$3.00 AECO
2017
0
2018
2019
pennwest.com | TSX: PWT NYSE: PWE
2020
2021
US$55 WTI
C$3.00 AECO
2017
2018
2019
2020
2021
36
Leverage Viking Infrastructure
▪ Modest Viking development in current 5 year plan as more
capital is allocated to New Ventures
Gas Price
Oil Price
▪ Short-cycle nature allows for higher or lower pace of
development pending New Ventures results
Asset Level Free Cash Flow ($MM)
NOI
Total Capital excl. Enviro
Asset FCF
US$50/C$2.75 FCF
Production Profile (boe/d)
Base
2019
3,500 US$50/C$2.75
2017
2020
2018
2021
$40
3,000
2,500
$20
2,000
$0
1,500
1,000
($20)
500
($40)
US$55 WTI
C$3.00 AECO
2017
0
2018
pennwest.com | TSX: PWT NYSE: PWE
2019
2020
2021
US$55 WTI
C$3.00 AECO
2017
2018
2019
2020
2021
37
Pursue New Ventures
▪ ~40 locations in near-term inventory for 5 year plan
Gas Price
Oil Price
▪ To pursue oil-weighted Jurassic plays in 2018
▪ Ability to toggle capital up or down depending on well results
Asset Level Free Cash Flow ($MM)
NOI
Total Capital excl. Enviro
Asset FCF
US$50/C$2.75 FCF
Production Profile (boe/d)
Base
2019
9,000 US$50/C$2.75
2017
2020
2018
2021
$75
8,000
$50
7,000
6,000
$25
5,000
$0
4,000
3,000
($25)
2,000
($50)
($75)
1,000
US$55 WTI
C$3.00 AECO
2017
US$55 WTI
C$3.00 AECO
0
2018
2019
pennwest.com | TSX: PWT NYSE: PWE
2020
2021
2017
2018
2019
2020
2021
38
Appendix
Endnotes
All slides should be read in conjunction with “Definitions and Industry Terms”, “Non-GAAP Measure Advisory”, “Oil and Gas Disclosures Advisory” and “Forward-Looking Advisory”
Slide 3. Penn West Corporate Profile
Daily Volume (shares) is the 30 day average share volume traded on Canadian and US Exchanges per Bloomberg.
Slide 7. Liquids-Focused Growth Company
Production metrics and netback metrics are based on operating lease statements for Q1 2017, with play boundaries defined as per internal standards. Penn West land position is as at March
31, 2016. Net Sections based on internal identified inventory. Held for Sale includes properties expected to close in the second quarter of 2017 based on definitive agreement discussions to
complete transactions, and are subject to all necessary regulatory approvals and satisfaction of closing conditions customary in deals of this nature. All crude oil hedges have been entered into
on a C$WTI basis. US$ price is implied using foreign exchange rates as of March 31, 2017.
Slide 9. Low Decline Cash Flow Advantage
Type curve production and economics are based on internal estimates at WTI - US$52/bbl in 2017, US$53/bbl in 2018, escalating through 2021 and AECO - C$2.90/Mcf in 2017, C$2.65/Mcf in
2018, escalating through 2021. Economic analysis is performed based on internal estimates and economic assumptions and is not meant to be construed as guidance.
Slide 10. Resilient Assets in Volatile Commodity Prices
Break-even is calculated as the required WTI and/or AECO price for a project to achieve a 10% rate of return. Economic analysis is performed based on internal estimates and economic
assumptions and is not meant to be construed as guidance.
Slide 11. Focus on 2017 and 2018 Sustainability
Company 5YP based on internal estimates and economic assumptions and is for illustrative purposes and not to be construed as guidance. The 5YP is based on WTI of US$55/bbl and AECO
of C$3.00/Mcf with alternative WTI and AECO cases shown as guidance.
Slide 12. The Cardium is Our Foundation
Free Cash Flow figures are based on the Company’s 5 year plan based on a flat US$55 WTI and C$3.00 AECO.
Land position is based on internal estimates and is rounded. Production, % Liquids, and Netback are rounded based on Q1 2017 actual results. 2P Reserves are based on year-end 2016
reserves performed by our independent auditor.
All other figures are internal estimates and are illustrative in nature.
Original Oil In Place (OOIP) means Discovered Petroleum Initially In Place(DPIIP) as at December 31, 2016. OOIP/DPIIP estimates and recovery rates are as at December 31, 2016, and are
based on current accepted technology and have been prepared by internal geologists and reservoir engineers. DPIIP, as defined in the Canadian Oil and Gas Evaluations Handbook
(COGEH), is 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 DPIIP includes production,
reserves and contingent resources; the remainder is unrecoverable. There is significant uncertainty regarding the ultimate recoverability and the commercial viability to produce any portion of
this OOIP/DPIIP. The Company’s average working interest in the Cardium is 79%. Notwithstanding the uncertainty regarding recoverability of OOIP/DPIIP, the Company believes that it is the
most appropriate measure to properly consider the effects of the integrated waterflood program, particularly the effect of changes to recovery factor on potential ultimate resource recovery.
Slide 13. Cardium is a Free Cash Flow Machine
Outputs from the Company’s 5 year plan are based on a flat US$55 WTI and C$3.00 AECO.
Slide 14. Tremendous Potential With Consistent Injection
See comments on the uncertainty of recoverability of OOIP/DPIIP under the endnotes to slide 12 above.
Recovery factors, historical and forward looking, are based on internal Company estimates.
Continued on next page
pennwest.com | TSX: PWT NYSE: PWE
40
Endnotes
Slide 16. Pembina Integrated Development Details
Type curve production and economics are based on internal estimates at WTI - US$52/bbl in 2017, US$53/bbl in 2018, escalating through 2021 and AECO - C$2.90/Mcf in 2017, C$2.65/Mcf in
2018, escalating through 2021. Inventory is based on internal estimates.
Slide 17. Willesden Green Integrated Development Details
Type curve production and economics are based on internal estimates at WTI - US$52/bbl in 2017, US$53/bbl in 2018, escalating through 2021 and AECO - C$2.90/Mcf in 2017, C$2.65/Mcf in
2018, escalating through 2021. Inventory is based on internal estimates.
Slide 18. Signpost Demonstration in Crimson Lake
Hall Plot y axis is Cum (delta Pinj x dt), (kPa-days) x E06 and x axis is Cum Injection, ths. m3. Based on an injection well at 103/04-33-042-08W5.
Slide 19. Manufacturing Cold Flow in Peace River
Land position is based on internal estimates and is rounded. Production, % Liquids, and Netback are rounded based on Q1 2017 actual results. 2P Reserves are based on year-end 2016
reserves performed by our independent auditor.
All other figures are internal estimates and are illustrative in nature.
Slide 20. Peace River Economics, excluding benefit of JV carry
Type curve production and economics are based on internal estimates at WTI - US$52/bbl in 2017, US$53/bbl in 2018, escalating through 2021 and AECO - C$2.90/Mcf in 2017, C$2.65/Mcf in
2018, escalating through 2021. Inventory is based on internal estimates.
Slide 21. Leverage Infrastructure with Viking Prospects
Land position is based on internal estimates and is rounded. Production, % Liquids, and Netback are rounded based on Q1 2017 actual results. 2P Reserves are based on year-end 2016
reserves performed by our independent auditor.
All other figures are internal estimates and are illustrative in nature.
Slide 23. High Rate Alberta Viking Economics
Type curve production and economics are based on internal estimates at WTI - US$52/bbl in 2017, US$53/bbl in 2018, escalating through 2021 and AECO - C$2.90/Mcf in 2017, C$2.65/Mcf in
2018, escalating through 2021. Inventory is based on internal estimates.
Continued on next page
pennwest.com | TSX: PWT NYSE: PWE
41
Endnotes
Slide 25. Mannville Fahler B Type Curve and Offsetting Wells
Type curve production and economics are based on internal estimates at WTI - US$52/bbl in 2017, US$53/bbl in 2018, escalating through 2021 and AECO - C$2.90/Mcf in 2017, C$2.65/Mcf in
2018, escalating through 2021. Inventory is based on internal estimates.
Slide 26. Waterfloods Maintain Low Decline While Growing
Current corporate decline is based on internal estimates. Average current peer decline rate is based on a combination of peer disclosures, internal estimates, and sell-side analyst reports.
Slide 27. Major 2016 Restructuring Now Complete
Q1 2016 PF is pro-forma properties expected to close in early 2017 based on definitive agreement discussions to complete transactions, and are subject to all necessary regulatory approvals
and satisfaction of closing conditions customary in deals of this nature.
Slide 28. Strong Hedge Position
All crude oil hedges have been entered into on a C$WTI basis. US$ price is implied using foreign exchange rates as of March 31, 2017.
Slide 29. Improved Margins with a Focused Portfolio
2017 cash margins are illustrative in nature for the reader and is not to be construed as guidance for the Company. Cash Margins in Key Development Area metrics are based on operating
lease statements for Q1 2017, with play boundaries defined as per internal standards.
Slide 30. Margins Are An Excellent Engine for Cash
NOI contribution analysis is illustrative in nature for the reader and is not to be construed as guidance for the Company. Revenue and Royalties per boe is based on internal assumptions
around light oil, natural gas and field level offsets, and assumes FX rates of 1.325 CAD/USD for all cases. Does not include crude oil assignment and realized FX hedge gains/losses.
Transportation expense illustratively. Natural Gas prices are held constant at ~C$3.00 AECO. Opex assumes Key Development Area operating cost run rate of $13.25 per boe, at the mid-point
of guidance of $13.00 to $13.50 per boe. Hedging contribution is based on hedges outstanding as of May 3, 2017. Please note that the numbers contained in the slide have been rounded for
ease of illustration.
Slides 33-38.
Company 5YP based on internal estimates and economic assumptions and is for illustrative purposes and not to be construed as guidance. The 5YP is based on WTI of US$55/bbl and AECO
of C$3.00/Mcf with alternative WTI and AECO cases shown as guidance.
pennwest.com | TSX: PWT NYSE: PWE
42
Definitions and Industry Terms
1P means proved reserves as per Oil and Gas Disclosures Advisory.
Md means millidarcy.
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory.
Mmcf means million cubic feet.
ARO means asset retirement obligation.
MMboe means million barrels of oil equivalent.
A&D means oil and natural gas property acquisitions and divestitures.
MM means millions.
bbl means barrel or barrels.
NAV means Net Asset Value.
boe and boe/d mean barrels of oil equivalent and barrels of oil equivalent per day, respectively.
Net Debt means Senior Debt plus bank debt plus non-cash working capital deficit, detailed in the
Non-GAAP measure advisory.
CAGR means compound annual growth rate. CAGR is calculated determining an annual average
rate of growth over a period of time.
Capex means Total Capital as defined below.
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas
(methane) or various classes of oil.
Capital Expenditures includes all direct costs related to our operated and non-operated
development programs including drilling, completions, tie-in, development of and expansions to
existing facilities and major infrastructure, optimization and EOR activities.
NOI refers to Net Operating Income which means revenue net or royalties less operating costs.
Company means Penn West Petroleum or Obsidian Energy.
Opex means operating costs.
CEO means Chief Executive Officer.
PDP means Developed producing reserves as per Oil and Gas Disclosures Advisory.
DCET means drilling, completions, equip and tie-in costs.
PDNP means Developed non-producing reserves as per Oil and Gas Disclosures Advisory.
D+C means drill and complete costs
Dispositions means oil and natural gas property divestitures.
PIR means the profitability investment ratio, defined as the NPV divided by the discounted capital
costs.
Enviro means decommissioning expenditures.
PUD means Undeveloped reserves as per Oil and Gas Disclosures Advisory.
EOR means Enhanced Oil Recovery.
ROI means Return on Investment.
EUR means estimated ultimate recovery.
RF means Recovery Factor.
F&D means finding and development costs.
Total Capital includes all direct costs related to our operated and non-operated development and
base programs including DCET, facilities and major infrastructure capital, optimization, EOR,
corporate and other capital.
FX means foreign exchange rate, in our case typically refers to C$ to US$ exchange rates.
FCF means Free Cash Flow, which is Funds Flow from Operations less Total Capital
Expenditures
NPV means Net Present Value which is the sum of the present values of income and outgoing
cash flows over a period of time.
Vt means vertical well.
FFO means Funds Flow from Operations, detailed in the Non-GAAP measure advisory.
G&A means general and administrative expenses.
GOR means gas to oil ratio.
Hz means horizontal well.
IP means initial production, which is the average production over a specified time period.
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero.
JV means joint venture.
K means thousands.
Key Development Area means Penn West’s assets in the Cardium, Alberta Viking, and Peace
River areas and include additional royalty volume and minor non-core production throughout
Alberta, and will form the basis of our 2017 growth projections
Liquids % means the percentage of crude oil and NGLs from the total barrels of oil equivalent of
production.
pennwest.com | TSX: PWT NYSE: PWE
43
Non-GAAP Measures Advisory
Non-GAAP Measures Advisory
In this presentation, we refer to certain financial measures that are not determined in accordance with IFRS. These measures as presented do not have any standardized meaning
prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies. We believe that, in conjunction with results presented in
accordance with IFRS, these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance. You are
cautioned, however, that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance. These
measures include the following:
EBITDA is cash flow from operations excluding the impact of changes in non-cash working capital, decommissioning expenditures, financing expenses, realized gains and losses on
foreign exchange hedges on prepayments, realized foreign exchange gains and losses on debt prepayments and restructuring expenses. EBITDA as defined by Penn West’s debt
agreements excludes the EBITDA contribution from assets sold in the prior 12 months and is used within Penn West’s covenant calculations related to its syndicated bank facility and
senior notes;
Funds Flow from Operations is cash flow from operating activities before changes in non-cash working capital and decommissioning expenditures, excluding the effects of financing
related transactions from foreign exchange contracts and debt repayments/pre-payments. Funds Flow from Operations is more representative of cash related to continuing operations
and is used to assess the Company’s ability to fund dividend and planned capital programs. For additional information relating to Funds Flow from Operations see our latest
management's discussion and analysis which is available in Canada at www.sedar.com and in the United States at www.sec.gov;
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less
royalties, operating costs and transportation. The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets. For
additional information relating to netbacks, including a detailed calculation of our netbacks, see our latest management's discussion and analysis which is available in Canada at
www.sedar.com and in the United States at www.sec.gov;
Net debt is the amount of long-term debt, comprised of long-term notes and bank debt, plus net working capital (surplus)/deficit. Net debt is a measure of leverage and liquidity; and
Net working capital (surplus)/deficit is accounts payable and accrued liabilities plus dividends payable less the sum of accounts receivable and other current assets. Also includes
the net working capital portion of assets held for sale. We use this as a measure of net cash obligations to be settled in the near-term under the course of normal business operations.
pennwest.com | TSX: PWT NYSE: PWE
44
Oil and Gas Disclosures Advisory
Reserves Disclosures and Definitions
Any reference to reserves in this presentation are based on the report ("Sproule Report") prepared by Sproule Associates Limited dated February 22, 2017 where they evaluated one
hundred percent of the crude oil, natural gas and natural gas liquids reserves of Penn West and the net present value of future net revenue attributable to those reserves effective as
at December 31, 2016. For further information regarding the Sproule Report, see Appendix A to our Annual Information Form dated March 14, 2017 ("AIF"). It should not be assumed
that the estimates of future net revenues presented herein represent the fair market value of the reserves. There is no assurance that the forecast price and cost assumptions will be
attained and variances could be material. The recovery and reserves estimates of crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there
is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and natural gas liquid reserves may be greater than or less than the estimates provided
herein. The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties, due to the effects of aggregation.
Production and Reserves
The use of the word "gross" in this presentation (i) in relation to our interest in production and reserves, means our working interest (operating or non-operating) share before
deduction of royalties and without including our royalty interests, (ii) in relation to wells, means the total number of wells in which we have an interest, and (iii) in relation to properties,
means the total area of properties in which we have an interest. The use of the word "net" in this presentation (i) in relation to our interest in production and reserves, means our
working interest (operating or non-operating) share after deduction of royalty obligations, plus our royalty interests, (ii) in relation to our interest in wells, means the number of wells
obtained by aggregating our working interest in each of our gross wells, and (iii) in relation to our interest in a property, means the total area in which we have an interest multiplied by
the working interest owned by us. Unless otherwise stated, production volumes and reserves estimates in this presentation are stated on a gross basis. All references to well counts
are net to the Company, unless otherwise indicated.
Reserve Definitions
reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on the
analysis of drilling, geological, geophysical, and engineering data; the use of established technology; and specified economic conditions, which are generally accepted as being
reasonable. Reserves are classified according to the degree of certainty associated with the estimates.
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 the estimated proved plus probable reserves.
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed
the estimated proved reserves.
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories:
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low
expenditure (for example, when compared to the cost of drilling a well) to put the reserves on production. The developed category may be subdivided into producing and nonproducing.
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently
producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.
Developed non-producing reserves are those reserves that either have not been on production, or have previously been on production, but are shut-in, and the date of
resumption of production is unknown.
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling
a well) is required to render them capable of production. They must fully meet the requirements of the reserves category (proved, probable) to which they are assigned.
For additional reserve definitions, see "Notes to Reserves Data Tables" in our AIF.
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Forward-Looking Information Advisory
Certain statements contained in this presentation constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of the "safe
harbour" provisions of applicable securities legislation. In particular, this presentation contains, without limitation, forward-looking statements pertaining to the following: our expected
approach to development including the area-specific asset development plans; the timing and our expectations of such development activities including our expectations for selffunded growth; our potential inventory increase in the Peace River area; our expected production growth rate; our capital spending plans in 2017; our expected production ranges for
both full year and Q4 2017 including the expected relative weightings of liquids to gas; the effects of our integrated waterflood approach; the Original Oil in Place; expected economic
results of the integrated development will yield superior economics to primary only; that our Peace Rive JV partner’s obligation to carry certain expenditures will finish by year-end;
that the “post carry” economics continue to remain attractive as a result from high production rates and cost improvements; that the Alberta Viking is low risk, profitable acreage derisked by offset competitor activity, that there will be a shorter term payout in the Alberta Viking to balance the longer term nature of Cardium waterfloods; our ability to apply the
learning in the Saskatchewan Viking to the Alberta Viking development; the potential to pursue new drilling opportunities in various prospective zones; that the projected Company
growth will be self-funded down to certain prices per barrel; the effect of a more focused portfolio on 2017 cash margins; and the illustrative cash consideration analysis at the
Company level at different prices per barrel.
The key metrics for the Cardium, Alberta Viking and Peace River assets and the Company as a whole set forth in this presentation may be considered to be future-oriented financial
information or a financial outlook for the purposes of applicable Canadian securities laws. Financial outlook and future-oriented financial information contained in this presentation are
based on assumptions about future events based on management's assessment of the relevant information currently available. In particular, this presentation contains projected
operational and financial information for 2017 for the Cardium, Alberta Viking and Peace River assets and Company as a whole. The future-oriented financial information and financial
outlooks contained in this presentation have been approved by management as of the date of this presentation. Readers are cautioned that any such financial outlook and futureoriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein.
With respect to forward-looking statements contained in this document, we have made assumptions regarding, among other things: our ability to complete asset sales and the terms
and timing of any such sales; the economic returns that we anticipate realizing from expenditures made on our assets; future crude oil, natural gas liquids and natural gas prices and
differentials between light, medium and heavy oil prices and Canadian, WTI and world oil and natural gas prices; future capital expenditure levels; future crude oil, natural gas liquids
and natural gas production levels; drilling results; future exchange rates and interest rates; future taxes and royalties; the continued suspension of our dividend; our ability to execute
our capital programs as planned without significant adverse impacts from various factors beyond our control, including weather, infrastructure access and delays in obtaining
regulatory approvals and third party consents; our ability to obtain equipment in a timely manner to carry out development activities and the costs thereof; our ability to market our oil
and natural gas successfully; our ability to obtain financing on acceptable terms, including our ability to renew or replace our syndicated bank facility; our ability to finance the
repayment of our senior unsecured notes on maturity; and our ability to add production and reserves through our development and exploitation activities. In addition, many of the
forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements, and such assumptions should be
taken into account when reading such forward-looking statements. Please note that illustrative examples are not to be construed as guidance for the Company.
Although Penn West believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the
forward-looking information because Penn West can give no assurances that they will prove to be correct. Since forward-looking information addresses future events and conditions,
by its very nature it involves inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include,
but are not limited to: the risks associated with the oil and gas industry in general such as operational risks in development, exploration and production; the possibility that we breach
one or more of the financial covenants pursuant to our amending agreements with the syndicated banks and the holders of our senior, unsecured notes; delays or changes in plans
with respect to exploration or development projects or capital expenditures; the uncertainty of estimates and projections relating to reserves, production, costs and expenses; health,
safety and environmental risks; commodity price and exchange rate fluctuations; interest rate fluctuations; marketing and transportation; loss of markets; environmental risks;
competition; incorrect assessment of the value of acquisitions; failure to complete or realize the anticipated benefits of acquisitions or dispositions; ability to access sufficient capital
from internal and external sources; failure to obtain required regulatory and other approvals; reliance on third parties; and changes in legislation, including but not limited to tax laws,
royalties and environmental regulations. Readers are cautioned that the foregoing list of factors is not exhaustive.
Continued on next page
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Forward-Looking Information Advisory (cont’d)
Additional information on these and other factors that could affect Penn West, or its operations or financial results, are included in the Company's most recently filed Management's
Discussion and Analysis (See "Forward-Looking Statements" therein)), Annual Information Form (See "Risk Factors" and "Forward-Looking Statements" therein) and other reports on
file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), EDGAR website (www.sec.gov) or Penn West's website.
Unless otherwise specified, the forward-looking statements contained in this document speak only as of March 14, 2017. Except as expressly required by applicable securities laws,
we do not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forwardlooking statements contained in this document are expressly qualified by this cautionary statement.
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