take a closer look Encana Corporation Corporate Presentation October 2012
Our Strategy Creating and Unlocking Value Maintaining Financial Strength While Transitioning To A More Diversified Portfolio 2
Maintaining Financial Strength Transitioning to a More Diversified Portfolio Accelerate pace of investment in oil and liquids rich natural gas plays Minimize dry natural gas investments Enhance financial strength and flexibility…
Encana Corporation Leading North American Resource Play Company Production Volumes 2011 Actual: Greater Sierra Natural Gas (MMcf/d) 3,333 (inc. Horn River) Liquids (Mbbls/d) 24 Cutbank Ridge (inc. Montney) 2012 Forecast:…
Transitioning to a More Balanced Portfolio Accelerating Pace of Development in Oil & Liquids Rich Natural Gas Plays Increased oil and liquids Original Current rich natural gas land Liquids Play 2012F 2012F position to 3 million net…
Building Momentum 65% Two Year Liquids CAGR* 2011 2012F 2013F Capital Investment (B) 4.6 3.5 4.0 5.0 Net Divestitures (B) 1.6 3.0 1.0 1.5 Net Capital Investment (B) 3.0 0.5 3.0 3.5 Natural Gas (Bcf/d) 3.3 3.0 2.9 3.1 Oil…
Refocusing Capital Allocation Rapid Transition to Liquids Focused Investments Capital Allocation by Commodity billions 3 65% 2.5 50% 2 49% 1.5 34% 36% 27% 23% 1 15% 0.5 1% 0 2011 2012F 2013F Oil Liquids Rich Natural…
2013 Capital Program Funding Sources Maintaining Financial Strength & Flexibility a Top Priority Base capital program funded by cash flow Expect to achieve net divestitures of 1.0B - 1.5B High degree of confidence in our ability to…
Enhancing Financial Strength and Flexibility Exploring Multiple Joint Ventures and Divestitures Additional 10% of Cutbank Ridge Partnership Early life liquids portfolio joint ventures Duvernay Tuscaloosa Marine Shale Eaglebine…
Why Third Party Capital Works For Us Encanas Track Record of Creating Value Achieve immediate recognition of value Cutbank Ridge Partnership with Mitsubishi KOGAS Maintain capital and operating efficiencies on mature assets…
Continue to Achieve Industry Leading Cost Structures Encana - North Americas Resource Play Specialist Established history of developing resource plays from the ground up: From early stage identification Supported by dedicated new…
Canadian Division 2012 2013 Strategic Focus Implement Mitsubishi and Toyota joint ventures Evaluate Duvernay and other potential liquids-rich assets Advance liquids extraction through deep-cut midstream arrangements Initiate…
Canadian Division Production Profile 2012 and 2013 Liquids Growth Strategy Liquids Production (Mbbls/d) Continuing development of 30 liquids rich plays Bighorn, Peace River Arch 25 (PRA) Montney Advancing Duvernay appraisal…
Duvernay Asset Overview Resource 400,000 net acres 97% average working interest PIIP*: 8.7 billion BOE 50 60 API oil gravity 1,020 1,170 Btu/scf average heat content 1,000 1,600 net well locations 160 330 acre expected well…
Duvernay The Encana Advantage Encana has captured over half of the high-graded liquids rich gas condensate fairway Encana free condensate yield results are top quartile Estimate 30 Tcf and 4 Bbbls PIIP on Encana lands Cutting…
Peace River Arch Asset Overview Resource 435,000 net acres PIIP: 36 Tcf, 1 3 Bbbls Well cost: 7.5 11.5 million EUR per well: 4 16 Bcfe Oil gravity: 47 63 API Strategy Accelerate liquids production Advance multi-well pad…
Bighorn Asset Overview Resource 383,000 net acres PIIP: 33 Tcf, 1 2 Bbbls Well cost: 5 10 million EUR per well: 2 12 Bcfe Oil gravity: 55 60 API Strategy Pursue liquids-rich opportunities Demonstrate cost control and…
Cutbank Ridge Asset Overview Resource 819,000 gross acres PIIP: 130 Tcf, 1 2 Bbbls Well cost: 5 10 million EUR per well: 4 16 Bcfe Oil gravity: 45 65 API Strategy Increase value through accelerated development and continuous…
Clearwater Asset Overview Resource 4.6 million net acres Encana owns mineral rights on 78% of lands Average royalty rate of 2% PIIP: 12 Tcf (CBM), 200 MMbbls Strategy Advance conventional oil plays Maintain CBM competence…
USA Division Key Strategies Advance oil and liquids-rich Collingwood/ plays to commercial viability Utica Jonah Transfer knowledge and technology from natural gas Piceance development to liquids DJ Niobrara Niobrara/ plays…
USA Division Emerging Liquids Portfolio 2012 Program Develop a low cost portfolio of high impact liquids plays Continue appraisal drilling program to assess prospectivity within existing liquids plays Capture additional acreage in…
USA Division Liquids Production Profile 2012 and 2013 Liquids Strategy Complete appraisal and initiate Liquids Production (Mbbls/d) 20 commercial development of 18 liquids portfolio 16 Renegotiate midstream contracts 14 to…
Tuscaloosa Marine Shale Asset Overview Play Core Resource 7.5 MMbbls/Section PIIP 355,000 net acres Joe Jackson PIIP*: 9.4 billion BOE 4H-2 Primarily light oil; sold into Louisiana Horseshoe Hill 10H-1 Anderson 18H-1 Light…
Eaglebine J. Gresham 1H Asset Overview Gresham 1H Resource Williams 3H 115,000 net acres PIIP: 8.6 billion BOE Primarily light oil 75% RI 700 BOE/d IP(0) 700 net well locations Strategy Continue appraisal drilling of…
Mississippian Lime Asset Overview Resource 360,000 net acres PIIP: 16 billion BOE Primarily light oil with associated NGLs Encana Play Outline 82.5% RI 1,900 net well locations Strategy Establish commerciality on acreage…
Utica/Collingwood Shale Asset Overview Resource Lake Huron 430,000 net acres PIIP: 24 Tcfe Lake Kendall & Koehler 1-33 90 bbls/MMcf of NGLs Michigan 83% RI Wilmot 1-21 1,700 net well locations Strategy Demonstrate repeatable…
San Juan Basin Asset Overview Resource Meadows I08 174,000 net acres in oil window PIIP: 7.5 billion BOE Primarily light oil with associated NGLs 80% RI 905 net locations Bisti H09 Strategy Escrito P16 Appraise oil window of…
Encana Corporation Strategy and the Finance Plan Successful execution of our strategy requires Corporate Finance to provide: Ample liquidity on a timely basis Flexibility Variety of funding sources Continual access to capital…
Encana Corporation Liquidity Supports Execution of Strategy 1.5 billion of long term debt maturing in the next five years 1.9 billion of cash and short term investments at June 30, 2012; expect 2.5 billion by year end 5 billion of…
U.S Natural Gas Demand Story Strong Growth Continues 68 % of Total Natural Gas Consumption (Bcf/d) Generation Share of Power Generation 60% 66 Coal 50% 64 40% Natural Gas 30% 62 20% 60 10% 0% 58 May-10 May-11…
Short-term: Coal to Gas Displacement Historical and Implied by Gas Forward Curve The forward curve implies about 2.0 Bcf/d of displacement year over year from September to December Bcf/d /MMBtu 32 Source: Encana Fundamentals,…
Long-term: Coal Unit Retirements 5 Bcf/d Demand Opportunity Between 2012 and 2025 48 GWs of coal-fired capacity retirements have been announced, representing a 5 Bcf/d potential NG demand opportunity. 33 Source: Encana…
New Natural Gas Demand Creation Excellent Opportunities Diversified Across Many Sectors Short Term Medium Term Long Term Bcf/d < 3 yrs 3 to 10 yrs 10 years + Announced Retirements 1 to 2* 2 to 4 4+ Incremental Power 0 to 1 7 to…
Weather Adjusted Supply and Demand Depleting the Storage Overhang Coal-to-gas displacement is helping to alleviate a massive storage overhang that resulted from a record warm winter Weather Adjusted Supply & Storage Inventories…
North American Gas Production Dry Gas, Liquids Rich Gas and Associated Gas Production rolled over at the end of the first quarter of 2012, this was expedited by shut-ins. Forecast Bcf/d Declining production 80 9% 10% 11% 70 9%…
Future North American Natural Gas Prices Long-term Sustainability Natural gas prices will need to range between 4.00 and 6.00/MMBtu to provide acceptable returns for producers and enable demand growth. Supply Factors Supply growth…
North American Oil Growth, Displacement and Infrastructure Investment We expect continued robust growth Significant investment capital is being redirected to N.A. oil plays Emerging plays could experience an Eagle Ford growth…
North American Natural Gas Liquids Optimism Centered on Long-term Demand Growth Demand Factors North America is one of the lowest cost ethylene producers in the world and we expect ethane demand to thrive as a result Overall…
North American Fundamentals Summary Attractive Fundamentals Emerging for Gas, Oil & NGLs Natural gas prices are bottoming and will start trending to levels that are more sustainable long-term Natural gas demand growth from power…
Why Invest in Encana Take A Closer Look See the Upside Leading North American resource play company Exposure to natural gas Growing exposure to oil and natural gas liquids Track record for value creation Proud of meeting our…
Supplemental
High Quality Asset Base Reserves and Economic Contingent Resources (ECR) (Tcfe) Reserves (Tcfe) Years 100 Technical Certainty Both reserves and ECR are 100% 90% 70 evaluated by IQREs* 90 50% Chart illustrates implied reserve 80…
Tremendous Resource Potential Increased 1C Economic Contingent Resources by 25%* Proved Reserves and 1C Economic Contingent Resources (Tcfe) Cutbank Ridge1 Peace River Arch2 Greater Sierra3 Horn River CBM Bighorn High…
Comprehensive Disclosure of Reserves & Resources Largest Reserves and Resource Life in Encanas History Encana Reserves and Resources (Tcfe) 1 Estimated reserves Estimated economic contingent resources P1 P2 P3 KRP C1 C2 C3 Proved…
Reserves and Contingent Resources Definitions C haracterization of Petroleum Initially in Place (PIIP) Reser ve Resource Description Petro leum Resource Management System SPE PRMS Project Maturity Sub-Classes SUB-COMMERCIAL…
Leading N.A. Resource Play Company Encana Resource Play Execution Methodology Encana has a defined and highly successful methodology for developing resource plays from the ground up that will support the advancement of new liquids…
Encanas Resource Play Life Cycle A Portfolio Approach to Investment Peak Rate (%) 100 USA Jonah Canada Greater Sierra - Jean Marie 80 Liquids-rich Dry Gas Oil Horseshoe Canyon CBM 60 Eaglebine East Texas Mississippian Lime…
Bighorn Horizontal Inventory Liquids Yield (bbls/MMcf) Condensate: 110% of WTI 100 Butane: 70% of WTI Propane: 45% of WTI 80 Ethane: Premium on AECO 60 Hz 40 Hz 20 Hz 0 CARD. DUNV. CDTT Vertical Wells FLHR F /…
Cutbank Ridge Partnership (CRP) Partnership with Mitsubishi: Mitsubishi agreed to acquire 40% interest in the CRP undeveloped assets for C2.9 billion 5 development areas: Saturn, Swan and Cutbank Montney Cutbank Cadomin…
Montney Supply Cost Evolution Advancing Resource Play Hub Design and Development Montney Performance History MMCDN /MMBtu 3.5 6.45 7 3.0 Cost/Interval Supply Cost* 6 4.55 2.5 5 DCT costs / interval 4.10 3.20 2.0 3.40…
Montney Tight Gas Play Total Resource MONTNEY FAIRWAY ECA Portfolio of Montney Assets OGIP Map High Low Upper Montney Lower Montney Neutron/ GR Porosity Porosity Por. & BVW MD RHOB_2 EVAL_MONTNEY.VOL_UWAT_ 1950…
Improved Completions Results Slickwater/Cluster Perforation Application 5 well pilot: Improved initial rates compared to offsetting wells Cost reduction expected with continued optimization More sustainable approach to completions…
Clearwater Business Unit Liquids Potential Currently evaluating more than 9 prospective oil zones 300 high graded oil locations identified to date Well cost: 1 3 million EUR per well: 60 150 Mbbls Oil gravity: 30 40 API…
Toyota Tsusho Toyota Tsusho Corporation: Upfront cash component of 100 million Provides capital funding of 502 million over 7 years: Wheatland 1,488 drilling locations 1,606 recompletion locations Acquired uniform 32.5% GORR…
KOGAS Joint Venture Kiwigana Two Separate Deals Deal 1 Signed February 26, 2010 38 sections 324 million earning capital Earned 50% WI in April 2012 Deal 2 Signed July 28, 2011 33 sections 185 million earning capital Spend…
Deep Panuke Project First Natural Gas Production Forecast: Q3 2012 Operating cost (/Mcfe) 0.95-0.65 at 200 300 MMcf/d Transportation cost (/Mcfe) 1.68 Royalties 2% Delivery point Dracut 59
Increasing Exposure to Oil and NGLs Liquids Value Uplift Price Differential Example on 1 Mcf at the Wellhead C/Mcfe* 3.00 2.50 2.00 0.88 0.70 1.39 1.50 1.00 1.39 1.38 0.50 1.01 0.00 Dewpoint Shallow Cut Deep Cut…
Tuscaloosa Marine Shale Well Performance & Key Learnings Subsurface Learnings Oil Rate (Bbls/d) Longer laterals & enhanced 10,000 10,000 completions delivering improved Anderson 18H-1 Anderson 17H-1 performance EUR: Pending EUR:…
Eaglebine Well Performance & Key Learnings Gresham Trust 1H Clyde Williams 1H Clyde Williams 2H Clyde Williams 3H John Gresham 1H John Gresham 2H Subsurface Learnings 1,000 Lower Laminated zone capable of 700 BOE/d Oil…
Utica/Collingwood Shale Well Performance Subsurface Learnings MMcf/d 10.0 Reservoir responds well to soak time before production start up RPH Target Well Parameters Well cost: 7.3 million EUR per well: 5.3 Bcfe 1.0 Lateral…
DJ Basin- Horizontal Niobrara Asset Overview bbls/d 1,000 Resource Denver 49,000 net acres PIIP: 735 million BOE 105 bbls/MMcf of NGLs Primarily light oil with associated gas/NGLs 80% RI 100 150 net well locations Strategy…
Haynesville Supply Cost Evolution Supply cost (/mcfe) 6 Continuous completion design evolution 5 35 % Optimum well density Slowback 4 Deeper longer wells Ultra long laterals 3 Cross Unit regulatory reform 2 Increased…
Haynesville Resource Play Hub Long Lateral Encana Leading the Way 1st Cross Unit permits granted in the State of Louisiana 1st Cross Unit well drilled Enhancement to RPH Efficiencies Successfully drilled six long laterals…
2012 U.S. GAAP Conversion Encana has adopted U.S. GAAP for 2012 financial reporting Previously followed Canadian GAAP/IFRS, with annual U.S. GAAP reconciliations Why convert Improves comparability of financial results with…
Credit Rating Comparison As of May 31, 2012 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 NXY APC SWN CHK -…
What Makes LNG for Transportation Viable Illustrative Full Cycle Cost Components LNG vs. Diesel Sales and Excise Tax Retailing Distribution LNG Diesel 2.50 to 2.90/DGE 3.70 to 5.00/DGE LNG offers 20% to 40% savings…
Transforming North American Transportation Strategic with Economic Return on Infrastructure Investment Bcf/d Low Adoption High Adoption Bcf/d 7.5 7.5 5% of Fuel Market Share 10% of Fuel Market Share 5 5 2.5 2.5 0 0 2012…
The North American Market is Responding Infrastructure Growth and Recent Industry Announcements Total NGV Station Count Industry Announcements 1,200 1030 Station Infrastructure 96 952 1,000 Shell/Travel Centers of America 831…
Natural Gas Fueling Projects through 2012 Paving the Way for Transportation and Operations Infrastructure Investment 8 to 9 CNG stations 1 mini liquefaction plant; additional planned 12 mobile LNG stations 1 fixed LNG station,…
North American LNG Export Opportunity Asian Market Forecast to grow 25 Bcf/d by 2020 United States and Canada Poised to Capture a Material Portion Bcf/d 70 Forecast 60 50 40 30 20 10 0 2009 2011 2013 2015 2017 2019…
North American Proposed LNG Export Projects Kitimat T1/T2 1.4 Bcf/d 2016 Greenfield Bcf/d of LNG Regulatory Proposed Shell/Asian Total Consortium Capacity Approved Cove Point 1.6 Bcf/d 1 Bcf/d Canada 1.4 3.6 5.0 2020…
Natural Gas Yield Curve Relative Storage and Price Relationship Prices fell as inventory relative to the five-year average grew substantially. Starting in April, the relative inventory started to decrease as storage injections have…
North American Production Change by Year Dry, Liquids Rich, and Associated Gas Breakout Dry natural gas production is expected to continue to decline and will only partially be offset by increases in liquids rich gas and associated…
North American Half-Cycle Cost of New Supply 2012 Deliverability at Current Rig Count Dry gas development is required to offset annual production declines. Gas production required to offset Supply Cost /MMBtu (9% after tax return;…
North American Oil Plays North American oil supply growth is currently being driven by five major supply areas: Western Canadian Oil Sands, Bakken, Greater Anadarko, Greater Permian, and Eagle Ford. Oil Sands Bakken Utica…
N.A. Oil Pipeline Projects under Development 7 MMbbls/d of Capacity Slated to be Online by Mid-2017* Northern Gateway (850) Trans Mountain Expansions (450) 7 Projects (825) Keystone XL North (700) XX Oilsands: 2,000…
Proposed N.A. NGL Pipeline Expansion 2 MMbbls/d Slated to be Online by Mid-2014 Numerous new NGL pipelines are currently under development across North America. Western Canada +45 Bakken +60 Sarnia West Midwest Rockies…
U.S. Ethane Supply vs. Demand Including Exports In the near-term, we expect the market to be tightly balanced. Going forward, the viability of the North American ethane market depends on how many new greenfield steam crackers are…
Western Canadian Ethane Supply vs. Demand Including Imports The ethane market in Western Canada has the ability to expand to meet growing supply. Mbbls/d 350 Forecast 300 Demand Expansions 250 200 Demand* 150 100…
U.S. Propane Supply vs. Demand Propane demand is expected to grow steadily as exports increase. Mbbls/d 1,800 Forecast 1,600 Spare Export 1,400 Capacity 1,200 Exports 1,000 800 Demand 600 400 Supply (Including…
Western Canadian Propane Supply vs. Demand Post 2016 export capacity expansions will likely be required to meet expected propane supply growth. Mbbls/d 250 Forecast Cochin 200 Pipeline Spare Export Reversal Capacity 150…
Associated Gas Production Contribution from Oil Directed Drilling Gas production from oil-directed drilling is currently 7.1 Bcf/d and is expected to increase to 8.8 Bcf/d by the end of 2013. Bcf/d 10 9 Forecast 8 7 6 5 4 3…
NGL Overview Pricing and Streams NGL Stream Types NGL Pricing C2+ NGL Mix = ethane plus NGLs mix = C2/C3/C4/C5+ mixture NGLs are priced based on components C3+ NGL Mix = propane plus NGLs mix = C3/C4/C5+ mixture entrained in the…
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…
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