CORPORATE PRESENTATION Encana Corporation March 2015
2015 Program Aligned with Strategy Vision: LEADING NORTH AMERICAN RESOURCE PLAY COMPANY Focused on developing four of the highest quality assets in North America with industry leading efficiency Strategy: DISCIPLINED FOCUS ON…
2015 Scorecard Strategic Objectives Investment grade credit rating 2015F Capital + anticipated dividends to be fully funded Prudently managing existing debt Allocate ~80% 2015F capital to top 4 growth assets Agile to capitalize on…
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…
2015F capital program plus anticipated dividends, using the stated price assumptions, are expected to be fully funded by 2015F cash flow plus $800 million in expected proceeds from previously announced divestitures. Price assumptions:…
? 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…
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 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% ? Achieved average cost…
Well Positioned For 2015 & Beyond ? Continuous evaluation of our portfolio ? Relentless pursuit of efficiencies ? Growing high margin production from four most strategic assets ? Enhancing performance from our base portfolio ?…
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…
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 on…
TOP TIER RESOURCE David Hill ? High quality rocks ? Scale ? Running room ? Oil and gas OPERATIONAL EXCELLENCE Mike McAllister ? Best in class operators can differentiate ? Focus on: efficiency integrated thinking maximize…
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)…
Focused on Value vs. Volumes Proceeds from 2014 asset sales plus balance sheet cash redeployed into higher margin liquids-rich assets High-graded portfolio into premium margin production 2014 Portfolio Transition Plan Accelerated…
Operational Excellence ? The Encana Way Safely Delivering the Best Wells for the Best Value Safest year in company?s history 61% liquids growth 4% cost efficiencies in base Reduction in base decline Smooth transition of new assets…
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…
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…
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…
Leveraging our Strengths to Drive Improved Returns ? Lower well costs ? Apply Encana?s resource play expertise to further decrease well costs ? Optimize completion techniques ? Continue trend of y-o-y per well production and return…
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
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):…
Focus across all fields on base optimization and operating cost reduction projects ? Haynesville re-frac wells continue to perform better than expectations ? Water management initiatives ? Frac communication mitigation programs ?…
EOG APA CNQ DVN MRO ECA APC NBL PXD CHK 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+ A1 A A2 A- A3 BBB+ Baa1 BBB Baa2 BBB- Baa3 BB+…
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 Since 2003, we?ve realized approximately $9 billion in hedging gains* *As at February 24, 2015, before-tax. 2.1 1.1 $4.17 $4.29 5 4 3 2 1 0 0.0 0.5 1.0…
2015F Cash Flow ($ 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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