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June 2015 Investor Presentation – Encana Corp

Encana Corp · Jun 8, 2015 · 42 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. June 2015 Investor Presentation – Encana Corp – slide 1
  2. June 2015 Investor Presentation – Encana Corp – slide 2
    2015 Focus Navigating Market Volatility From a Position of Strength ? ~80% of capital to Permian, Eagle Ford, Duvernay & Montney ? High margin production from the 4 assets to grow by ~35% Q4 2015 vs. Q4 2014 Executing a disciplined…
  3. June 2015 Investor Presentation – Encana Corp – slide 3
    2015 Capital Focused on Four Strategic Growth Assets Premium Positions in Top North American Resource Plays ? Focused on highest margin assets: Permian, Eagle Ford, Montney, Duvernay ? Receiving ~80% of 2015F capital ? High quality…
  4. June 2015 Investor Presentation – Encana Corp – slide 4
    Capital Focused on Strategic Growth Assets ~80% of 2015F Capital Allocated to Four Most Strategic Assets Exercising Disciplined Capital Allocation Does not include carry capital. 2015 carry capital is expected to be ~$420 - $460…
  5. June 2015 Investor Presentation – Encana Corp – slide 5
    Significant Exposure To Oil Price Improvement 0 20 40 60 80 100 120 140 160 2013 2014 2015F* 0 100 200 300 400 500 600 $55 $60 $65 $70 *2015F volumes based on mid-point of guidance range. Oil NGLs Mbbls/d Annual…
  6. June 2015 Investor Presentation – Encana Corp – slide 6
    3 Significant Exposure To Oil Price Improvement 0 20 40 60 80 100 120 140 160 2013 2014 2015F* 0 100 200 300 400 500 600 $55 $60 $65 $70 *2015F volumes based on mid-point of guidance range. Oil NGLs Mbbls/d Annual…
  7. June 2015 Investor Presentation – Encana Corp – slide 7
    Permian Massive, High-Quality Resource Potential Exposure to Multiple Potential Producing Horizons Why we like it ? Most prolific onshore oil basin in North America ? Basin production >1.7 MMbbls/d ? >35 Bboes of cumulative oil…
  8. June 2015 Investor Presentation – Encana Corp – slide 8
    Permian 2015 Program Objectives ? Grow production to ~45-50 MBOE/d ? Implement Resource Play Hub ? Simultaneous operations ? Line of sight to ~25% in horizontal well cost savings ? Advancing play while enhancing well performance and…
  9. June 2015 Investor Presentation – Encana Corp – slide 9
    Permian Q1 2015 Update: Operational Excellence ? Implement Resource Play Hub ? Simultaneous operations ? Self-sourcing commodities ? Fit-for-purpose rigs ? ~25% service cost reduction 7.8 7.1 1.1 1.0 0.8 0.9 1.0 1.0 1.1…
  10. June 2015 Investor Presentation – Encana Corp – slide 10
    Permian Advancing RPH ? Four well pad with simultaneous operations ? First time ? Pumping our own sand ? Using sand silos ? Testing large jobs (up to 4,000 lb/ft) First Encana Simultaneous Operation in the Permian Howard county…
  11. June 2015 Investor Presentation – Encana Corp – slide 11
    8 El Paso Midland Artesia Big Spring Centurion North & South Basin Cactus Longhorn Reversal & Expansion Permian Express I BridgeTex West Texas Gulf Cushing Wichita Falls Longview Houston Permian Express II Corpus…
  12. June 2015 Investor Presentation – Encana Corp – slide 12
    Eagle Ford Core Position in a Premier Oil Play Why we like it ? 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…
  13. June 2015 Investor Presentation – Encana Corp – slide 13
    Eagle Ford 2015 Program Objectives ? Grow production to ~49-57 MBOE/d ? Line of sight to ~20% in well cost savings ? Enhanced well performance ? Cluster spacing ? Sand concentration ? Future inventory potential ? Testing the…
  14. June 2015 Investor Presentation – Encana Corp – slide 14
    Eagle Ford Q1 2015 Update : Operational Excellence ? Improved by 50% 0 5,000 10,000 15,000 20,000 0 5 10 15 20 Average Spud to Rig Release 2014 Q3 2015 Q1 Pacesetter 7.7 7.4 6.7 1.54 1.48 1.33 1.20 1.32 1.44 1.56 1.68…
  15. June 2015 Investor Presentation – Encana Corp – slide 15
    Eagle Ford Well Performance and Production Optimization ? Continued focus on base optimization to arrest decline and increase recoveries ? Re-stimulation activity yielding excellent results ? Addition of artificial lift systems…
  16. June 2015 Investor Presentation – Encana Corp – slide 16
    Montney Decades of Low Cost Inventory Why we like it ? Massive running room and scale ? Potential of >2 Bcf/d and >50,000 bbls/d on Encana lands ? >25 years of drilling inventory ? Large contiguous core land positions ? Encana…
  17. June 2015 Investor Presentation – Encana Corp – slide 17
    Montney 2015 Program Objectives ? Grow production to ~140-150 MBOE/d ? Reduce D&C costs by >20% ? Utilize water resource hub ? Cost savings of ~$400K/well ? Enhance well performance ? Higher intensity fracs ? Optimize wellsite…
  18. June 2015 Investor Presentation – Encana Corp – slide 18
    Montney Q1 2015 Update : Operational Excellence ? Improved by 50% ? Utilizing water resource hub ? Optimization of drill bit and well design ? Reduced flowback time ? ~9% service cost reduction 8.0 7.4 6.4 0.94 0.87 0.75 0.5…
  19. June 2015 Investor Presentation – Encana Corp – slide 19
    Montney Efficiency Initiatives ? Filtration, storage and distribution ? Produced water recycling ? Frac water supply saving $400K/well Water Resource Hub High Intensity Frac Improving Well Performance 2015 Completion design…
  20. June 2015 Investor Presentation – Encana Corp – slide 20
    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 ? Cadomin ?…
  21. June 2015 Investor Presentation – Encana Corp – slide 21
    AECO Price Drivers ? The AECO price is the result of the interaction of several dynamic factors which should keep AECO connected to the rest of the North American market place Source: Encana Fundamentals
  22. June 2015 Investor Presentation – Encana Corp – slide 22
    13 AECO basis has traded between 70% - 100% of NYMEX since 2009 AECO Price Drivers ? The AECO price is the result of the interaction of several dynamic factors which should keep AECO connected to the rest of the North American…
  23. June 2015 Investor Presentation – Encana Corp – slide 23
    Duvernay Premier Position in World Class Reservoir Why we like it ? Massive resource ? Estimated total resource of 443 Tcf gas, 11.3 Bbbls NGLs, 61.7 Bbbls oil (source: ERCB; medium case) ? Huge potential growth engine for Encana,…
  24. June 2015 Investor Presentation – Encana Corp – slide 24
    Duvernay 2015 Program Objectives ? Grow production to ~9-11 MBOE/d ? Well cost reductions through RPH efficiencies ? Reduce D&C costs by >30% ? Enhance well performance through optimizing completions intensity ? Evaluating tighter…
  25. June 2015 Investor Presentation – Encana Corp – slide 25
    Duvernay Q1 2015 Update : Operational Excellence ? Improved by 50% Normalized to 7,200 ft. lateral length ? Optimization of drill bit and well design ? 2 simultaneous frac spreads per pad ? Cluster spacing and proppant loading ?…
  26. June 2015 Investor Presentation – Encana Corp – slide 26
    Duvernay Condensate Pricing Advantage 35 45 55 65 75 85 95 105 115 Jan 2012 Jan 2013 Jan 2014 Jan 2015 Edmonton Condensate NYMEX WTI Crude Gulf Coast Condensate* Source: Encana Fundamentals, CME, Net Energy, TMX *Mont…
  27. June 2015 Investor Presentation – Encana Corp – slide 27
    Duvernay Joint Venture ? Phoenix (subsidiary of PetroChina) agreed to invest C$2.18 billion for 49.9% working interest ? C$1.18 billion up front cash in 2012 ? A further investment of C$1.0 billion during the commitment period
  28. June 2015 Investor Presentation – Encana Corp – slide 28
    Capital Allocation ? Focused and disciplined capital allocation ? >80% of 2015F capital to Permian, Eagle Ford, Montney, Duvernay 2015 Program Aligned with Core Competencies Disciplined Capital Program Focused on Most Strategic…
  29. June 2015 Investor Presentation – Encana Corp – slide 29
    2015 Scorecard Strategic Objectives Investment grade credit rating 2015F Capital + anticipated dividends to be fully funded Prudently managing existing debt No incremental debt in 2015 Allocate ~80% 2015F capital to 4 most…
  30. June 2015 Investor Presentation – Encana Corp – slide 30
    2014 Portfolio Transition Plan Accelerated by A&D Activity $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 Dispositions Acquisitions $MM Bighorn Clearwater CBM Replaced lower margin natural gas production with higher margin…
  31. June 2015 Investor Presentation – Encana Corp – slide 31
    Q1 Highlights ? Operational excellence drives value ? Driving efficiency through innovation and operational excellence across the organization ? Continuing transition to increased liquids weighting - 78% liquids growth vs. Q1 2014 ?…
  32. June 2015 Investor Presentation – Encana Corp – slide 32
    Q1 In Review Growing High Margin Production Q1 2015 Upstream Operating Cash Flow** Excluding Hedging ($MM) 454 Upstream Operating Cash Flow** Including Hedging ($MM) 702 Total Cash Flow ($MM) 495 - $ per share, diluted 0.65…
  33. June 2015 Investor Presentation – Encana Corp – slide 33
    On Track To Meet 2015 Guidance Capital Discipline Remains Paramount 2015F Total Cash Flow ($B) 1.4 ? 1.6 - per common share, diluted ($/sh) 1.70 ? 1.95 Weighted Average Common Shares Outstanding ? diluted* (MM) 821 Capital…
  34. June 2015 Investor Presentation – Encana Corp – slide 34
    DJ Basin, San Juan, TMS Key Statistics *Supply Cost is defined as the flat NYMEX/WTI price that yields an IRR of 9% and does not include land or G&A costs. Reflects joint venture leverage DJ Basin San Juan TMS Land (net acres):…
  35. June 2015 Investor Presentation – Encana Corp – slide 35
    Prudent Financial Management Debt Portfolio as at December 31, 2014 0 250 500 750 1,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038…
  36. June 2015 Investor Presentation – Encana Corp – slide 36
    EOG APA CNQ DVN MRO ECA APC NBL PXD CHK Credit Rating Comparison As of February 13, 2015 Indicates ratings below investment grade
  37. June 2015 Investor Presentation – Encana Corp – slide 37
    Liquids Value Chain Projected Composition of Total Liquids Production Liquids primarily comprised of higher value products 2013 2014 2015F 2015F Pricing (%WTI) Oil and Condensate 65% 71% 78% 85% Butane 8% 8% 5% 47% Propane 13% 11%…
  38. June 2015 Investor Presentation – Encana Corp – slide 38
    Updated Hedging Position Hedge Program Adds Greater Certainty to Cash Flow *As at March 31, 2015, before-tax. 1.0 $4.17 0 1 2 3 4 5 0.0 0.5 1.0 1.5 2.0 2015 Bcf/d $/Mcf Volume NYMEX Fixed Price Swap 55.8 62.09 0 10…
  39. June 2015 Investor Presentation – Encana Corp – slide 39
    2015F ENCANA CORPORATE GUIDANCE US$, U.S. GAAP May 12, 2015 Encana?s 2015 planned capital program plus anticipated dividends, using the stated price assumptions, is expected to be fully funded by forecasted 2015 cash flow plus…
  40. June 2015 Investor Presentation – Encana Corp – slide 40
    ~80% of 2015F capital to four most strategic assets Portfolio More Resilient To Commodity Cycle Focus On Highest Margin Assets e Expenses* Expenses* *Includes operating expense, transportation and processing and production and…
  41. June 2015 Investor Presentation – Encana Corp – slide 41
    Cost Reductions & Value Improvement Initiatives On Track To Achieve Targeted ~$375 MM Cost Savings/Efficiencies Realized Price: Value not Volume ? Producing higher value products ? Panuke seasonal operating strategy ? Redirecting…
  42. June 2015 Investor Presentation – Encana Corp – slide 42
    Committed to maintaining investment grade credit rating ? Mid-BBB ratings from Moody?s, S&P and DBRS ? C$1.4 billion equity issue ? Proceeds used to repay notes due in 2017 and 2018; no long-term debt maturities until 2019 ?…

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