Vision Getting Back to Winning Encana Corporation Corporate Presentation Strategy November 2013 Goals
Getting Back to Winning Vision Strategy Goal Leading Disciplined focus Growing North American on generating shareholder resource play profitable growth value company 2017 Balanced liquids and natural gas Growth from a…
Insights from Strategy Process OPERATIONAL RESPECTED RESOURCE RICH AND EXECUTION MARKET PORTFOLIO EXCELLENCE FUNDAMENTALS TAKING BOLD ACTION MORE GAS POSITIONS CAPITAL ORGANIZATIONAL THAN WE NEED ALLOCATION ALIGNMENT…
Implications of Strategic Review Process Winning Core Competencies High quality rocks Understand the trade Scale winds TOP TIER MARKET Running room RESOURCE FUNDAMENTALS Strong linkage to capital allocation Oil and gas Actively…
Vision, Strategy, Goals Leading Disciplined focus Growing North American on generating shareholder resource play profitable growth value company High quality rocks Scale and running room Operational excellence Portfolio…
Vision, Strategy, Goals Leading Disciplined focus Growing North American on generating shareholder resource play profitable growth value company High quality rocks Concentrated capital Scale and running allocation room…
Vision, Strategy, Goals Leading Disciplined focus Growing North American on generating shareholder resource play profitable growth value company High quality rocks Concentrated capital Sustainable business Scale and running…
Key Actions Focus capital investment to top five liquids rich and oil assets Drive cost structures lower Focused operations to improve efficiency Align organization with strategy 20% workforce reduction Consolidate to two primary…
Encanas Dividend Sustainable through the Commodity Cycle Strategic importance of a strong balance sheet reinforced through: Focus on costs and efficiency Disciplined capital allocation to high return projects Dividend aligned with…
Strategy Delivers Sustainable Returns Target +10% CAGR CFPS through 2017 Expected CFPS growth 3x faster than production 2013F 2017F Driven by accelerated capital allocation to high margin oil and condensate assets Anticipate 75%…
Capital Focused on Top Five Liquids Rich & Oil Assets Accelerate Investment in Core Assets 75% of 2.5B 2014F capital to top five assets 2013F 2014F 2014F 2017F Focused on high return assets Sustainable capital program Gas…
Why the Top Five Liquids Rich & Oil Assets Matter Opportunity Set Returns 40% Liquids rich and oil assets Montney Liquids rich Running room and scalability - growth potential of 50,000 Duvernay boe/d High value condensate Best…
Montney Decades of Low Cost Inventory Oil Why We Like It Liquids Massive running room and scale Gas Potential of 2 Bcf/d and 50,000 bbls/d on Encana lands 25 years of drilling inventory Large contiguous core land positions Encana…
Duvernay Premier Position in World Class Reservoir Why We Like It Oil Massive resource Liquids Estimated total resource of 443 Tcf gas, 11.3 Bbbls NGLs, 61.7 Bbbls oil (source: ERCB; medium case) Huge potential growth engine for…
DJ Basin Delivering High Margin Liquids Production Today Why We Like It Light oil play with significant scale Encana in heart of the Wattenberg field Strong economics - oil and condensate make Liquids up 70% of total liquids…
San Juan First Mover in New Oil Play Why We Like It Light, sweet oil play discovered by Encana Capable of producing 50,000 boe/d Gas Dominant operator in the play Strong economics, ability to apply scale Consistent well performance…
Tuscaloosa Marine Shale Massive Oil Resource, Ideal for Execution at Scale Why We Like It Emerging oil asset with massive upside potential 8 BBoe of PIIP Potential to produce 50,000 bbls/d 60% of Encanas 300k net acres is Tier 1 land…
Clearwater Royalty Business Public Offering Unlocking New Value Surfacing value from Encanas large portfolio of Alberta mineral fee title lands 5.2 million net acres with freehold oil or gas rights Edmonton Transferring fee title and…
2014 Deliverables Taking Bold Action Guidance issued by mid December 2013 Investor Day mid year Capital program expected to be 2.5 billion 75% of capital directed to top five liquids rich and oil assets Liquids production growing…
Encana Corporation Disciplined Focus on Profitable Growth Leading North American oil and gas resource play company High quality rocks Vision Scale and running room Operational excellence Portfolio optionality Focused on generating…
Strategy is the Keystone Alignment of Business Elements to Fit Strategy Strategy
Supplemental
Commodity Outlook Natural Gas Due to abundant, low cost supply, natural gas prices are expected to remain range bound around current levels Henry Hub (/MMBtu) 12 10 8 6 4 2 0 2003 2004 2005 2006 2007 2008 2009 2010…
Commodity Outlook North American Oil Oil prices are expected to be highly volatile due to geopolitical events, global economic uncertainty and future oil supply growth from emerging plays; further uncertainty exists for regional…
Detailed Market Fundamentals Work Key Strength - Supports Risk Management Since 2003, weve realized approximately 9 billion in hedging gains* Bcf/d /Mcf 50% of AECO basis exposure hedged in 2013-2015 3.0 5.00 4.37 4.37 2.5 4.19…
Encana is Resource Rich Approximately 80 Tcf of Natural Gas Resource Potential 75+ years producing life at Encanas current rate of production Encana 2013F total gas production: 1.06 Tcf ECA Natural Gas Potential Natural gas…
The A&D Market Remains Robust Additional Buyers Emerging North American private equity oil & gas fund inflows B Estimated 60B-90B in uninvested funds targeting oil & gas Run-rate 60 Closed funds 50 40 30 20 10 0 2007 08 09 10 11 12…
Leveraging Third Party Capital Completed Joint Ventures, Partnerships & Farm-outs Millions Third Party Capital Projections* Carry capital projected to grow from 750 million to over 1 billion 5,000 Partners agreed to invest over 3.8…
Accelerating Value Cutbank Ridge Partnership (CRP) Capital & NPV Comparison Much Less Capital for Similar Value ECA MM CRP Retain 250 ECA Capital 100% 30% 200 ECA Revenue 100% 60% A-Tax PIR 0.9 2.6 150 A-Tax IRR 32% 90% 100 A-Tax…
Maintaining Financial Strength & Flexibility Liquidity Supports Execution of Strategy Paid 2013 debt maturity (500 million) with cash 3.3 billion of cash and short term investments as at October 23, 2013 4.4 billion of undrawn bank…
Credit Rating Comparison As of June 30, 2013 S&P Moodys AAA Aaa AA+ Aa1 AA Aa2 AA- Aa3 A+ A1 A A2 A- A3 BBB+ Baa1 BBB Baa2 BBB- Baa3 BB+ Ba1 BB Ba2 BB- Ba3 B+ B1 B B2 APA EOG DVN ECA TLM APC SWN CHK - Indicates ratings below…
Montney Decades of Low Cost Inventory Key Statistics Land (net acres) 575,000 Average working interest 66% Type Curve EUR/well 7 - 9 Bcfe, 650 - 1,000 MBoe Type Curve ROR 60 - 100% Well inventory (gross) 3,700 Well costs (DCT)…
Cutbank Ridge Partnership (CRP) Partnership with Mitsubishi: Encana 60% interest Mitsubishi, 40% interest 5 development areas: Montney: Saturn, Swan and Tumbler Ridge Cadomin: Tumbler Ridge Doig: Tumbler Ridge Investment…
Duvernay Premier Position in World Class Reservoir Key Statistics Land (net acres) 253,000 Average working interest 50% RPH type curve EUR/well 1,000 - 1,200 MBoe RPH type curve ROR 100% Well inventory (gross) 1,420 RPH well…
Unconventional Reservoir Comparison Duvernay World Class Reservoir Encana controls one third of the top tier land in the condensate window* Reservoir Attribute Duvernay Marcellus Eagle Ford TVD Depth (ft) 8,200 13,100 400 8,400…
Duvernay Royalties and Taxes Impact of Royalty and Tax Structures Single Well IRR% 200 180 Before Royalties 160 Before Tax 140 After Tax 120 IRR (%) 100 80 60 40 20 0 Eagle Ford Duvernay
Duvernay Joint Venture PetroChina agreed to invest C2.18 billion for 49.9% working interest C1.18 billion up front cash A further investment of C1.0 billion during the commitment period (4 years) Estimated C4.0 billion total…
DJ Basin Delivering High Margin Liquids Production Today Key Statistics Land (net acres) 49,000 Average working interest 50% Type Curve EUR/well 325 - 425 MBoe Type Curve ROR 55 - 85% Well inventory (gross) 500 - 700 Well costs…
San Juan First Mover in New Oil Play Key Statistics Land (net acres) 176,000 Average working interest 54% RPH type curve EUR/well 600 - 680 MBoe RPH type curve ROR 45% - 70% Well inventory (gross) 700+ RPH well costs (DCT) 4 -…
TMS Massive Resource, Ideal for Execution at Scale Key Statistics Land (net acres) 302,000 Average working interest 75% RPH type curve EUR/well 700 - 800 MBoe RPH type curve ROR 40% - 50% Well inventory (gross) 1,300 RPH well…
Advisory Regarding Reserves Data & Other Oil & Gas Information Disclosure Protocols National Instrument (NI) 51-101 of the Canadian Securities Administrators imposes oil and gas disclosure standards for Canadian public companies such as…
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