Encana Corporation Corporate Presentation April 2015
Capital Focused on Strategic Growth Assets ~80% of 2015F Capital Allocated to Top Four Assets Exercising Disciplined Capital Allocation Does not include carry capital. 2015 carry capital is expected to be ~$420 - $460 million. 2015F based…
2015 Capital Focused on Four Strategic Growth Assets Strategy Enables Ongoing Portfolio Evolution ? ~80% of 2015F capital focused on highest margin production: Permian, Eagle Ford, Montney, Duvernay ? High quality resources with strong…
2015 ? Continued Focus on Operational Excellence Deliver Growth from all Four Strategic Assets in 2015 ? Deliver profitable liquids growth ? 2015 average annual liquids growth of ~60% ? ~65% of liquids to be high value oil and field…
Updated 2015 Guidance Capital Program + Anticipated Dividends To Be Fully Funded - 500 1,000 1,500 2,000 2,500 3,000 Original 2015 Guidance $70/$4/$0.87 WTI Oil $50/bbl & NYMEX Gas $3/MMBtu Lower Liquids Volumes Lower…
Committed to maintaining investment grade credit rating ? All three rating agencies confirmed mid-BBB ratings after the Athlon acquisition announcement ? C$1.4 billion equity issue ? Proceeds used to repay mid-term debt due in 2017 and…
2014 Year-End Proved Reserves Proved Oil Reserves Up ~150% Year-Over-Year ? Traded low margin natural gas for high margin oil ? Focus on value vs. volumes ? Significant oil reserve additions ? Proved oil reserves up ~150% ? 2P oil…
Permian Cost Efficiencies and Liquids Growth Expected in 2015 ? Acquisition closed on November 13, 2014 ? Uninterrupted operations through transition, retained majority of Athlon Energy Inc. employees ? Focused on optimizing well…
Eagle Ford Operational Improvements and Increased Liquids in 2015 ? Significant operational improvements since acquiring assets: ? ~25% IP30 rate improvement, ~10% drilling cost reduction (~$300K/well), ~25% faster cycle times ?…
Montney Progressing High Intensity Completions Design in 2015 ? Increased 2014 annualized liquids production by 87% to ~19 Mbbls/d ? Continued success with high intensity completions ? Dawson wells continue to produce ~100% higher…
Duvernay February 2015 update Significant Well Cost Reductions Achieved Through RPH* Efficiencies ? 2014 annual liquids production growth of ~200% to ~2.1 Mbbls/d ? Reduced y-o-y drilling times by ~50%, reduced well costs by ~40% ?…
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…
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…
2014 - Executing on Strategy ? Repositioned and re-sized the organization ? Reduced work force by ~25% ? Achieved total cost savings of approximately $150 million ? Exercised disciplined capital allocation ? Focused capital on growth…
2014 Accomplishments Strategy Execution Delivers a Transformative Year Operational Excellence Cost savings of $150 million from organizational realignment and operating efficiencies 61% y-o-y total liquids growth Lowered cycle…
2014 Guidance 2014 Actual Total Cash Flow ($B) 3.2 ? 3.3 2.9 - per common share, diluted ($/sh) 4.32 ? 4.45 3.96 Capital Investment ($B) 2.5 ? 2.6 2.5 Natural Gas (Bcf/d) 2.3 ? 2.4 2.4 Oil & Field Condensate (Mbbls/d) 49 ? 51 49…
2014 In Review Margin Improvement Evident in Results 2013 2014 % Ch Upstream Operating Cash Flow* Excluding Hedging ($MM) 2,652 3,999 51 Upstream Operating Cash Flow* Including Hedging ($MM) 3,192 3,918 23 Total Cash Flow ($MM)…
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…
The Permian Transformative Acquisition in World Class Basin Why we like it ? Premiere position in the Midland Basin ? 140,000 net acres ? Potential estimated recoverable resource of ~3 billion BOE ? Strongly accretive, accelerates…
The Permian Key Statistics Land (net acres): 140,000 Average working interest: 83% RPH type curve EUR/well: 650 ? 800 MBoe RPH type curve ROR: 20% ? 40% Well inventory (gross): 5,000 RPH well costs (DCT): $6.5 ? $8.5 million…
Permian Basin Market Fundamentals Close Proximity to Markets, Extensive Infrastructure in Place ? Well-developed transportation network ? Pipeline expansions underway are expected to alleviate current export constraints ? ~800…
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…
Eagle Ford Key Statistics Land (net acres): 45,400 Average working interest: 92% RPH type curve EUR/well: 250 ? 700 MBoe RPH type curve ROR: 30% ? 40% Well inventory (gross): >400 RPH well costs (DCT): $7 ? $8 million Royalty…
Eagle Ford: Potential for Further Value Creation Leveraging our Strengths to Drive Improved Returns ? Lower well costs ? Apply Encana?s resource play expertise to further decrease well costs ? Optimize completion techniques ?…
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…
Montney Key Statistics Land (net acres): 606,000 Average working interest: 68% Type Curve EUR/well: Oil wells 800 ? 1,000 MBoe Gas wells 9 ? 12 Bcfe Type Curve ROR: 40 ? >100% Well inventory (gross): 3,700 Well costs (DCT): $7 ?…
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 ?…
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,…
Duvernay Key Statistics Land (net acres): 343,000 Average working interest: 59% RPH type curve EUR/well: 1,000 ? 1,200 MBoe RPH type curve ROR: >90% Well inventory (gross): 1,400 ? 1,450 RPH well costs (DCT)(1): $12 ? $20…
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
Condensate vs. Crude Oil Prices 30 40 50 60 70 80 90 100 110 120 Jan 2012 Jan 2013 Jan 2014 Jan 2015 Edmonton Condensate NYMEX WTI Crude Gulf Coast Condensate* Source: Encana Fundamentals, CME, Net Energy, TMX *Mont Belvieu.
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):…
Base Asset Optimization Improving Base Declines, Increasing Returns Focus across all fields on base optimization and operating cost reduction projects ? Haynesville re-frac wells continue to perform better than expectations ? Water…
Credit Rating Comparison As of February 13, 2015 Indicates ratings below investment grade Credit Rating Comparison As of February 13, 2015 Indicates ratings below investment grade S&P Moody?s AAA Aaa AA+ Aa1 AA Aa2 AA- Aa3 A+…
$100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 CAD Denominated USD Denominated Encana Debt Maturity Schedule FX rate as of February 4, 2015 - 1.2550
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%…
Updated Hedging Position Hedge Program Adds Greater Certainty to Cash Flow *As at February 24, 2015, before-tax. 2.1 1.1 $4.17 $4.29 0 1 2 3 4 5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 2014 2015 Bcf/d $/Mcf Volume NYMEX Fixed…
2015F Cash Flow ($ billions, except per share amount) Total Cash Flow (1)(2) 1.4 ? 1.6 - Per common share, diluted ($/share) 1.90 ? 2.15 Weighted average common shares outstanding ? diluted (millions) 741 Capital Investment ($…
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