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May 2015 Investor Presentation – Cenovus Energy Inc.

Cenovus Energy Inc. · May 22, 2015 · 45 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. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 1
    A different kind of oil sands
  2. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 2
    A different kind of oil sands Focus on total shareholder return & building long-term value ? Top-tier oil sands portfolio generates predictable, reliable growth ? Strong project execution & innovation drives performance ? Strategic…
  3. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 3
    Strong integrated portfolio TSX, NYSE | CVE Enterprise value C$25 billion Shares outstanding 829 MM 2015F production Oil & NGLs Natural gas 204 Mbbls/d 438 MMcf/d 2014 proved & probable reserves 3.9 BBOE Bitumen Economic…
  4. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 4
    Advancing strategy; maintaining financial resilience in 2015 ? Focusing capital on highest return projects ? Foster Creek G & Christina Lake F ? competitive supply costs of US$40-$45/bbl; within projected WTI of US$50.50/bbl ?…
  5. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 5
    Established base of high quality resource Undiscovered BIIP 50 Bbbls Discovered BIIP 93 Bbbls 2.4 Bbbls 1.5 Bbbls Contingent 9.3 Bbbls Proved See advisory for information on resource estimates. There is no certainty that it will…
  6. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 6
    SAGD portfolio provides development opportunity & growth potential Totals may not add due to rounding. For additional information about our economic contingent resources please see the advisory. There is no certainty that it will be…
  7. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 7
    0 50 100 150 200 250 2009 2010 2011 2012 2013 2014 2015F Oil sands Conventional oil & NGLs Mbbls/d Volumes are shown before royalties and net to Cenovus. 2015F based on midpoints of guidance. Conventional oil includes Pelican…
  8. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 8
    Our manufacturing approach has driven oil sands growth 0 50 100 150 200 250 300 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F Foster Creek Christina Lake Oil sands…
  9. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 9
    Advancing oil sands projects 1 Properties 50% owned by ConocoPhillips. Certain phases may be subject to partner approval. 2 Total production capacity indicates projected potential for each project. 3 Each of phases F, G and H are…
  10. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 10
    $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 C$/bbl/d Proven track record in project development Source: FirstEnergy at February 2015; Cenovus Energy. Thermal oil sands capital efficiencies
  11. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 11
    0 10 20 30 40 50 CNQ CVE HSE MEG SU CNQ Horizon RDS AOSP SU Syncrude SU Base Leading oil sands operating costs $/bbl Operating costs per $/bbl reported at Q1 2015. Oil sands mining
  12. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 12
    SOR reflects resource quality & execution 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 GR FC TL CL NL ? Lower capital cost ? Lower operating cost ? Smaller surface footprint ? Lower energy usage ? Lower emissions ? Less water…
  13. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 13
    Start up SAGD Ramp down Full blowdown ~1 year 5 ? 10 years ~1 year 5+ years 5% 5 ? 50% 50 ? 70% Post steam recovery phase Improving SOR over the life of a SAGD pad SAGD pad 1 CSOR Steam Oil production Post steam recovery: ?…
  14. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 14
    Lowering SOR with the post steam recovery phase SAGD pad 1 SAGD pad 2 Oil production CSOR Time Steam is reallocated to a new pad Incremental oil
  15. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 15
    Demonstrating top tier reservoir performance 0 20 40 60 80 100 120 140 160 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15…
  16. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 16
    Focusing on consistent operations 0 20 40 60 80 100 120 140 160 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Mbbls/d…
  17. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 17
    Managing SOR at Foster Creek ? Optimizing placement of steam across our wells & pads with improved instrumentation ? Placing more pads on blow-down, transferring steam to new pads ? Using Wedge Well? technology to capture…
  18. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 18
    Understanding reservoir performance at Foster Creek Steam chambers ? 4D seismic SAGD pay 8 m Main facilities FC development boundary Christina Lake conformance / coalescence* Foster Creek conformance / coalescence Foster Creek…
  19. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 19
    Well conformance optimizes SOR ? Once steam chambers coalesce, good well conformance will minimize impact to SOR ? Increased Wedge Well? technology helps capture oil in existing wells with low conformance ? currently 89 wells…
  20. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 20
    Engineering & procurement ? Standard, repeatable design ? Outsource detailed engineering ? Standard equipment & services Fabrication ? Cenovus-owned & operated module yard (Nisku) ? Eliminates field rework & enhances safety…
  21. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 21
    Committed to maintaining low capital cost structure Capital Target total capital ~$11 - $14/bbl full cycle $2 - $3/bbl Growth capital: ? Phase expansion (includes all infrastructure & initial wells) ? Phase debottlenecking &…
  22. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 22
    Progressing engineering at Narrows Lake Narrows Lake commercial project: ? First commercial SAGD project to incorporate solvent aided process (SAP) ? Evaluating development options to leverage existing infrastructure at nearby…
  23. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 23
    Assessing development options at Telephone Lake Borealis region Telephone Lake project area Steepbank & East McMurray Saskatchewan Alberta Telephone Lake commercial project: ? Regulatory approval received in 2014 ? Continuing…
  24. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 24
    Continuing to evaluate Grand Rapids Grand Rapids Pilot location Central plant facility site SAGD pilot update: ? Operating since 2010 ? Two well pairs currently producing ? Third pilot well pair completed Q1 2015; steam…
  25. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 25
    Driving innovation in oil sands through technology Technology development drives SAGD performance: ? Wedge Well? technology ? Blowdown boiler ? Electric submersible pumps ? SkyStrat? drilling rig ? Solvent aided process ?…
  26. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 26
    Wedge Well? technology optimizes reservoir performance Technology details: ? < 0.1 average SOR ? Acceleration of production ? 10 ? 15% relative increase in recovery factor ? Foster Creek wells ? 89 currently producing ? Christina…
  27. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 27
    SAP at Narrows Lake improves project economics ? Decreases SOR by ~30% ? Increases full field recovery rates by ~15% ? Increases growth capital 10 - 20% ? Decreases sustaining capital by ~10% ? Reduces non-fuel operating costs…
  28. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 28
    SkyStrat? drilling rig technology accelerates SAGD development Traditional strat well SkyStrat? drilling rig 90 day window Year-round drilling High access costs Lower access costs Short season leads to labour inefficiencies…
  29. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 29
    Telephone Lake dewatering pilot successful Dewatering pilot update: ? Purpose was to reduce SOR ? Worked as expected ? 4D seismic & well logs indicate we successfully replaced water & confined air ? ~70% of mobile top water was…
  30. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 30
    Conventional assets and non-core dispositions help fund oil sands growth $ billion Conventional oil & gas: ? ~70% fee lands ? Payback less than three years ? Scalable & flexible capital program ? Diversification of product streams…
  31. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 31
    Fee lands provide strategic opportunity Fee lands generate free cash flow: ? 3.1 MM net acres (~90% fee) ? Mineral rights owned in perpetuity ? No royalties payable to the Crown ? 2014 royalty interest volumes of ~7,600 BOE/d (~55%…
  32. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 32
    Expanding margin through market access & integration Production Alberta pricing Transportation North American & global crude pricing Refining Global product pricing Participating in the value chain to expand margin
  33. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 33
    Integration continues to deliver value & reduce cash flow volatility ? Refineries have access to discounted crudes ? Wood River accesses multiple pipelines ? Keystone, Express-Platte, Mustang, Ozark ? Borger has access to Canadian…
  34. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 34
    Committing to pipeline expansions for market access Current pipeline access: ? West Coast: Trans Mountain ? 11,500 bbls/d ? US Gulf Coast: Enbridge USGC/Flanagan South ? 75,000 bbls/d Adding pipeline commitments: ? US Gulf Coast:…
  35. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 35
    Rail transportation plans ? Long-term plan to ship 10-20% of corporate volumes by rail ? Taken delivery of more than half of the 825 coiled & insulated rail cars ordered as of Q1 2015 ? Secured 30,000 bbls/d gross loading capacity…
  36. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 36
    Managing risk through a balanced approach Operational ? Heavy oil production integrated with refining capacity ? Scalable conventional oil programs provide flexibility ? Portfolio approach to transportation Financial ? Financial…
  37. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 37
    Maintaining financial strength & flexibility to support the business plan ? Ensure significant liquidity & long-term debt maturities ? $3.0 billion committed credit facility maturing November 30, 2018 ? US$4.75 billion in notes with…
  38. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 38
    (1) Internal use 180 MMcf, long- term fixed price sale 29 MMcf. 2015F production based on January 28, 2015 guidance. Differential hedges at March 31, 2015 Volume hedged $/bbl discount WTI-WCS Differential January? June 4,900 bbls/d…
  39. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 39
    Strong dividend yield Dividend yield comparison Annualized Q2 2015 dividend and share price as at May 13, 2015 for CVE and peers. Source: Bloomberg and CVE. 0% 2% 4% 6% CVE HSE S&P/TSX Energy SU S&P/TSX Composite CNQ IMO MEG
  40. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 40
    Creating value through social & governance performance Committed to good governance ? SER Committee of the Board provides oversight of environment and sustainability performance ? Enterprise Risk Management program, practices and…
  41. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 41
    Advancing our environmental performance ? Rigorous regulatory framework ensures environment considerations throughout project lifecycle ? Dedicated internal environment team focused on mitigating environmental risks ? Ongoing…
  42. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 42
    January 28, 2015 Steam to oil rates (%) ratio Foster Creek 62 - 68 550 - 600 Fuel 2.75 - 3.25 1 - 2 2.6 - 3.0 Non-fuel 12.00 - 14.00 Total 14.75 - 17.25 Christina Lake 67 - 74 650 - 700 Fuel 2.50 - 3.00 1 - 2 1.8 - 2.1 Non-fuel…
  43. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 43
    240 - 260 8.00 - 9.00 1.3 - 1.5 Upstream DD&A ($ billions) 1.5 - 1.7 1.70 - 2.00 Other DD&A ($ millions) (6) 255 - 290 1.8 - 2.0 Cash tax ($ millions) 0 - 50 390 - 445 Effective tax rate (%) (7) 27 - 32 Brent (US$/bbl) Independent…
  44. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 44
    Investor relations contacts Susan Grey Director, Investor Relations susan.grey@cenovus.com 403.766.4751 Graham Ingram Senior Analyst, Investor Relations graham.ingram@cenovus.com 403.766.2849 Anna Kozicky Senior Analyst,…
  45. May 2015 Investor Presentation – Cenovus Energy Inc. – slide 45

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