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August 2015 Investor Presentation – Encana Corp

Encana Corp · Aug 6, 2015 · 46 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. August 2015 Investor Presentation – Encana Corp – slide 1
    ENCANA CORPORATION CORPORATE PRESENTATION August 2015
  2. August 2015 Investor Presentation – Encana Corp – slide 2
    ? ~80% of capital to Permian, Eagle Ford, Duvernay & Montney ? Four strategic assets expected to deliver rates of return >30% Executing a disciplined capital program ? 2015F capital program + anticipated dividends to be fully funded…
  3. August 2015 Investor Presentation – Encana Corp – slide 3
    2 HIGH QUALITY ASSET BASE 2 Focused on Four Strategic Assets *2015F operating margins based on year-to-date actuals as at June 30th plus flat commodity price assumptions of $50/bbl WTI and $3.00/MMBtu NYMEX for the remainder of the…
  4. August 2015 Investor Presentation – Encana Corp – slide 4
    3 - 200 400 600 800 1,000 1,200 - 20 40 60 80 100 120 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15F 4Q15F POSITIONED FOR GROWTH BEYOND 2015 Permian + Eagle Ford + Duvernay + Montney Liquids Production (Mbbls/d) Production from…
  5. August 2015 Investor Presentation – Encana Corp – slide 5
    4 Emerging/New Play Growth Assets Mature Assets RELATIVE MATURITY Represents size of inventory based on current internal evaluation FOUR STRATEGIC ASSETS OFFER >12,000 LOCATIONS Oil & Condensate NGL (C2-C4) Gas 2015 production…
  6. August 2015 Investor Presentation – Encana Corp – slide 6
    FOCUSED CAPITAL PROGRAM ~80% of 2015 Capital Allocated to Four Strategic Assets
  7. August 2015 Investor Presentation – Encana Corp – slide 7
    6 COMPETITIVE OPERATING MARGINS AT TODAY?S PRICES Investing In Profitable Growth - 0.50 1.00 1.50 2.00 2.50 - 5 10 15 20 25 30 35 40 1Q15A 2Q15A 3Q15F 4Q15F Oil-Weighted Asset Operating Margin ($/BOE) 1Q & 2Q…
  8. August 2015 Investor Presentation – Encana Corp – slide 8
    CAPTURING EFFICIENCIES ACROSS THE BUSINESS Durable Cost Reductions, Focused Capital, Leaner Workforce 2/3 of $375MM 2015F efficiencies to be sustainable in higher commodity price environment 2015F capital focused on four…
  9. August 2015 Investor Presentation – Encana Corp – slide 9
    8 FINANCIAL POSITIONING Ample Liquidity To Support Execution of Strategy *$3.1 billion available under bank credit facilities as of July 16th due to outstanding commercial paper balances.. ? Committed to maintaining investment grade…
  10. August 2015 Investor Presentation – Encana Corp – slide 10
    10 PERMIAN MIDLAND BASIN Stacked Resource Potential Glasscock Howard Martin Midland/Upton Middle Spraberry - - 180 110 Lower Spraberry 145 140 210 350 Wollfcamp A 430 405 305 545 Wollfcamp B 230 - - 390 Wollfcamp C, D/Cline…
  11. August 2015 Investor Presentation – Encana Corp – slide 11
    11 PERMIAN 2015 Program ? Focused on optimizing well performance, capital efficiency, supply chain consolidation, developing midstream & marketing plan ? Horizontal program to integrate RPH* model into operations ? Better well…
  12. August 2015 Investor Presentation – Encana Corp – slide 12
    12 PERMIAN Q2 2015 Update ? TXL H2101 on production at 1,100 bbls/d and 1.1 MMcf/d ? 2,000 lbs/ft frac design; 4,574? lateral length ? Davidson 24-8H on production at 900 bbls/d and 1.3 MMcf/d ? 4,000 lbs/ft frac design; 4,450?…
  13. August 2015 Investor Presentation – Encana Corp – slide 13
    13 1 10 100 1,000 10,000 0 30 60 90 120 150 180 210 240 270 300 330 360 390 Rate BOE/D Days 1 10 100 1,000 10,000 0 30 60 90 120 150 180 210 240 270 300 330 360 390 Rate BOE/D Days PERMIAN Inventory and Well Performance…
  14. August 2015 Investor Presentation – Encana Corp – slide 14
    14 PERMIAN ? CURRENT PROGRAM Key Modeling Statistics *Di factor & b-factor for use with Arps? decline equation. Glasscock Howard A Martin Midland/Upton Wolfcamp A Wolfcamp B Wolfcamp A Lower Spraberry Wolfcamp B Wolfcamp A Wolfcamp B…
  15. August 2015 Investor Presentation – Encana Corp – slide 15
    15 PERMIAN BASIN MARKET FUNDAMENTALS Close Proximity to Market, Extensive Infrastructure in Place ? Well-developed transportation network ? Pipeline expansions have alleviated basin export constraints ? Permian differentials have…
  16. August 2015 Investor Presentation – Encana Corp – slide 16
    16 EAGLE FORD Core Position in a Premier Oil Play ? Largely contiguous position in the Karnes Trough ? Core of the core of the Eagle Ford ? Acreage primarily lies in the condensate / volatile oil window ? Most active and profitable…
  17. August 2015 Investor Presentation – Encana Corp – slide 17
    17 Austin Chalk Austin B Chalk Upper Buda Eagle Ford EAGLE FORD 2015 Program Upper and Lower Eagle Ford Stacking Patterns Austin Chalk + Eagle Ford Austin Chalk + Eagle Ford and Buda ? Increasing Inventory ? Position Encana…
  18. August 2015 Investor Presentation – Encana Corp – slide 18
    18 EAGLE FORD Q2 2015 Update 0 5,000 10,000 15,000 20,000 0 5 10 15 20 2014 Q3 2014 Q4 2015 Q1 2015 Q2 Pacesetter of 9.8 days Days Depth (ft) ? Recent Graben well on production at 1,300 bbls/d and 675 Mcf/d ? Current target…
  19. August 2015 Investor Presentation – Encana Corp – slide 19
    19 0 400 800 1,200 1,600 0 30 60 90 120 150 Rate (BOE/d) Days EAGLE FORD Inventory and Well Performance Kenedy Area / PTS Graben Kenedy Panna Maria Type Curve Areas Gross Inventory 1H15 Gross Wells 2015 Gross Wells…
  20. August 2015 Investor Presentation – Encana Corp – slide 20
    20 EAGLE FORD ? CURRENT PROGRAM Key Modeling Statistics Note: Oil gravity 42 - 55 API, heat content 1,300 Btu/scf Kenedy Panna Maria Graben Gross Inventory (#) 120 200 300 Gross 2015 Wells (#) 41 22 7 WI % 100 98 98 IP30 (bbls/d)…
  21. August 2015 Investor Presentation – Encana Corp – slide 21
    21 DUVERNAY Premier Position in World Class Reservoir ? Massive resource ? Estimated total resource of 443 Tcf gas, 11.3 Bbbls NGLs, 61.7 Bbbls oil (source: AER: AGS Open File Report October 2012; medium case) ? Huge potential…
  22. August 2015 Investor Presentation – Encana Corp – slide 22
    22 DUVERNAY 2015 Program 2015 Rig Count 2015 Rig Release 2015 Wells on Stream 2015 Capital Production Q4 2 ? 3 14 ? 18 20 ? 25 $200 ? 250MM 17 MBOE/d ? Significant well cost reductions ? Some of the highest EUR wells in North…
  23. August 2015 Investor Presentation – Encana Corp – slide 23
    23 0 5,000 10,000 15,000 20,000 25,000 0 10 20 30 40 50 60 70 Depth (ft) 2012 2013 2014 2015 Q1 Pacesetter 2015 Q2 30.5 24.3 17.3 12.0 10.4 4.2 3.4 2.4 1.7 1.4 - 7654321 - 10 20 30 40 2012 2013 2014 1Q15 2Q15…
  24. August 2015 Investor Presentation – Encana Corp – slide 24
    24 0 1,000 2,000 3,000 4,000 0 5 10 15 20 25 30 Simonette Type Curve Simonette Gross Inventory 1H2015 Gross wells 2015 Gross Wells Type Curve Condensate EUR (MBbl) Inventory Type Curve EUR (MBOE) 5 ? 65 bbls/MMcf 80…
  25. August 2015 Investor Presentation – Encana Corp – slide 25
    25 DUVERNAY ? CURRENT PROGRAM Key Modeling Statistics Note: Condensate gravity 52 API, heat content 1,270 Btu/scf Condensate Gas Ratio 65 ? 150 bbls/MMcf Condensate Gas Ratio 150 ? 250 bbls/MMcf Gross Inventory (#) 150 400 Gross…
  26. August 2015 Investor Presentation – Encana Corp – slide 26
    DUVERNAY JOINT VENTURE ? Brion (formerly Phoenix, a subsidiary of PetroChina) agreed to invest C$2.18 billion for 49.9% working interest ? C$1.18 billion up front cash in 2012 ? Further investment of C$1.0 billion during the…
  27. August 2015 Investor Presentation – Encana Corp – slide 27
    27 BC AB 3 6 5 4 2 4 4 2 Tower Saturn Dawson South Dawson South Gordondale Pipestone MONTNEY Decades of Low Cost Inventory ? Massive running room and scale ? Potential of >2 Bcf/d and >50,000 bbls/d on Encana lands ?…
  28. August 2015 Investor Presentation – Encana Corp – slide 28
    MONTNEY 2015 Program 2015 Rig Count 2015 Rig Release 2015 Wells on Stream 2015 Capital Production Q4 2 ? 3 15 ? 25 40 ? 50 $220 - $280MM 146 MBOE/d Water Resource Hub ? Development focus in liquids rich region ? Maximize well…
  29. August 2015 Investor Presentation – Encana Corp – slide 29
    29 MONTNEY Q2 2015 Update ? C9-35 well on production at 400 bbls/d condensate and 10 MMcf/d ? D12-05 well on production at 375 bbls/d condensate and 7.5 MMcf/d ? C30-G well on production at 12 MMcf/d flat for 200 days and flowing…
  30. August 2015 Investor Presentation – Encana Corp – slide 30
    30 Type Curve Areas Gross Inventory 1H2015 Gross wells 2015 Gross wells Gas EUR (Bcf) NGL EUR (Mbbls) Condensate EUR (Mbbls) Inventory Type Curve EUR (MBOE) Tower 600 9 9 11 - 14 330 - 430 330 - 470 2,400 ? 3,100…
  31. August 2015 Investor Presentation – Encana Corp – slide 31
    31 MONTNEY ? CURRENT PROGRAM Key Modeling Statistics Tower Saturn Dawson South Gross Inventory (#) 600 1945 1755 Gross 2015 Wells (#) 9 10 4 WI% 60 60 60 IP30 (MMcf/d) 5 - 7 10 - 14 7 - 14 EUR/Bcfe 15 ? 19 12 ? 20 13 ? 19…
  32. August 2015 Investor Presentation – Encana Corp – slide 32
    32 MONTNEY Cutbank Ridge Partnership (CRP) ? Partnership with a subsidiary of Mitsubishi ? Encana: 60% interest ? Mitsubishi: 40% interest ? Development areas ? Montney: Tower, Dawson North, Dawson South and Tumbler Ridge ?…
  33. August 2015 Investor Presentation – Encana Corp – slide 33
    33 AECO BASIS HISTORICAL PERFORMANCE AECO basis has traded between 70% - 100 % of NYMEX since 2009 Source: Encana Fundamentals, CGPR, NYMEX, Various Pipelines ($2.00) ($1.50) ($1.00) ($0.50) $0.00 $0.50 $1.00 60% 80% 100%…
  34. August 2015 Investor Presentation – Encana Corp – slide 34
    DJ BASIN, SAN JUAN, TMS Key Statistics DJ Basin San Juan TMS Land (net acres): 51,000 206,000 200,000 Average working interest: 37% 58% 60% RPH type curve EUR/well: 540 ? 840 Mboe 400 ? 600 MBoe 600 ? 700 MBoe Well inventory…
  35. August 2015 Investor Presentation – Encana Corp – slide 35
    BETTER WELLS, LOWER COSTS, BIGGER INVENTORY ? Achieving strong well performance across the 4 strategic assets ? Liquids production accelerating in 2H 2015 ? Realizing sustainable operating and capital cost reductions ? Maintaining a…
  36. August 2015 Investor Presentation – Encana Corp – slide 36
    37 DISCIPLINED FOCUS ON PROFITABLE GROWTH VISION: Leading North American oil and gas resource play company ? High quality rocks ? Scale and running room ? Operational excellence ? Portfolio optionality STRATEGY: Disciplined focus…
  37. August 2015 Investor Presentation – Encana Corp – slide 37
    WINNING CORE COMPETENCIES Aligned Organizational Structure TOP TIER RESOURCE David Hill ? High quality rocks ? Scale ? Running room ? Oil and gas OPERATIONAL EXCELLENCE Mike McAllister ? Best in class operators can…
  38. August 2015 Investor Presentation – Encana Corp – slide 38
    39 DEMONSTRATING RESULTS AT TODAY?S PRICES Better Wells, Lower Costs, Increasing Inventory ? Achieving strong well performance across the 4 strategic assets ? Permian IP rates of >1,000 bbls/d oil ? Eagle Ford Graben IP rate of 1,300…
  39. August 2015 Investor Presentation – Encana Corp – slide 39
    40 BUILDING MOMENTUM FOR 2H 2015 Q2 In Review Q2 2015 YTD 2015 Upstream Operating Cash Flow** Excluding Realized Hedging ($MM) 315 769 Upstream Operating Cash Flow** Including Realized Hedging ($MM) 479 1,181 Total Cash Flow ($MM)…
  40. August 2015 Investor Presentation – Encana Corp – slide 40
    41 ON TRACK TO MEET 2015 GUIDANCE 2015F Total Cash Flow ($B) 1.4 ? 1.6 - per common share, diluted ($/sh) 1.70 ? 1.95 Weighted Average Common Shares Outstanding ? diluted* (millions) 821 Capital Investment ($B) 2.0 ? 2.2 Natural…
  41. August 2015 Investor Presentation – Encana Corp – slide 41
    42 PRUDENT FINANCIAL MANAGEMENT Debt Portfolio as at June 30, 2015 * Excludes outstanding CP balance 0 250 500 750 1,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032…
  42. August 2015 Investor Presentation – Encana Corp – slide 42
    43 CREDIT RATING COMPARISON As of June 30, 2015 EOG APA CNQ DVN MRO ECA APC NBL PXD CHK Indicates ratings below investment grade AAA Aaa AA+ Aa1 AA Aa2 AA- Aa3 A+ A1 A A2 A- A3 BBB+ Baa1 BBB Baa2 BBB- Baa3 BB+ Ba1 BB Ba2…
  43. August 2015 Investor Presentation – Encana Corp – slide 43
    44 LIQUIDS VALUE CHAIN Projected Composition of Total Liquids Production 2015F based on company guidance as at July 24, 2015. *Includes plant condensate Liquids primarily comprised of higher-value products Canada US 2015F…
  44. August 2015 Investor Presentation – Encana Corp – slide 44
    45 HEDGING PROGRAM Adds Greater Certainty to Cash Flow Hedge positions as at June 30, 20150 1.0 $4.29 0.00 1.00 2.00 3.00 4.00 5.00 0.0 0.5 1.0 1.5 2.0 2015 Bcf/d $/Mcf Volume NYMEX Fixed Price Swap 59.4 38 $61.96…
  45. August 2015 Investor Presentation – Encana Corp – slide 45
    2015F Cash Flow ($ billions, except per share amount) Total Cash Flow (1)(2) 1.4 ? 1.6 - Per common share, diluted ($/share) 1.70 ? 1.95 Weighted average common shares outstanding ? diluted (millions) 821 Capital Investment ($…
  46. August 2015 Investor Presentation – Encana Corp – slide 46
    Operating Costs ($/BOE at 6:1 ratio) Upstream Operating Expense (3) 4.60 ? 4. Transportation and Processing 8.75 ? 9. Administrative Expense (3) 1.50 ? 1. Depreciation, Depletion and Amortization Rate (4) 9.75 ?10. 2015 Sensitivities…

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