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March 2014 Investor Presentation – Cenovus Energy Inc.

Cenovus Energy Inc. · Mar 28, 2014 · 51 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. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 1
    A different kind of oil sands March 2014
  2. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 2
    A different kind of oil sands Focus on total shareholder return & building net asset value Foster Creek SAGD project Top-tier oil sands portfolio generates predictable, reliable growth Strong project execution & innovation drives…
  3. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 3
    Strong integrated oil portfolio TSX, NYSE | CVE Enterprise value C$27 billion Shares outstanding 756 MM 2014F production Oil & NGLs Natural gas 199 Mbbls/d 470 MMcf/d 2013 proved & probable reserves 3.2 BBOE Bitumen Economic…
  4. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 4
    2014 milestones Q1 Grow reserves & contingent resources ? Anticipate Grand Rapids regulatory approval (previously Q4 2013) Drill approximately 300 stratigraphic test wells & assess results Progress Narrows Lake phase A engineering,…
  5. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 5
    2013 milestones Q1 Grow reserves & contingent resources ??? Progress procurement, engineering & ground work at Narrows Lake project ? Drill 350 to 400 stratigraphic test wells & assess results ? Submit regulatory application for…
  6. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 6
    Established base of high quality resource See advisory for information on resource estimates. There is no certainty that it will be commercially viable to produce any portion of the contingent resources. ? Minimal exploration risk ?…
  7. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 7
    Bitumen best estimate economic contingent resources (Billions of barrels) 2013 2012 2011 2010 Foster Creek 1.4 1.3 0.9 0.8 Christina Lake core & other areas 1.1 1.2 1.1 0.8 Narrows Lake 0.1 0.1 0.4 0.5 Telephone Lake 2.6 2.2 2.1…
  8. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 8
    0 100 200 300 400 500 600 2010 2011 2012 2013 2014F 2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F Oil sands Pelican Lake Conventional oil & NGLs Mbbls/d Volumes are shown before royalties and net to Cenovus. 2014F…
  9. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 9
    0 50 100 150 200 250 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Foster Creek Christina Lake Oil sands production Mbbls/d Production is shown before royalties on a gross basis. Our…
  10. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 10
    1 Properties 50% owned by ConocoPhillips. Certain phases may be subject to partner approval. 2 Represents first production target for phase F. Phase G first production expected in 2015 and phase H in 2016. 3 Each of phases F, G and H…
  11. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 11
    0 100 200 300 400 500 2010 2011 2012 2013 2014F 2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F Emerging plays Narrows Lake Christina Lake Foster Creek Actual Mbbls/d Actual volumes are shown before royalties and on a net…
  12. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 12
    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 usage Low SOR means: Peer producing projects…
  13. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 13
    $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 C$/bbl/d 40% of all SAGD projects
  14. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 14
    Engineering & procurement ? Standard, repeatable design ? Outsource detailed engineering ? Standard equipment & services Fabrication ? Cenovus-owned & operated module yard (Nisku) ? Eliminates field rework & enhances safety…
  15. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 15
    0 20 40 60 80 100 120 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mbbls/d Production is shown on a gross basis. Daily production at Foster Creek Sustainable capacity is ~95% utilization
  16. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 16
    Understanding coalescence at Foster Creek ? Improving conformance is expected to optimize late stage SOR ? moving to longer steam circulation on start-up to improve conformance Christina Lake exceptional reservoir Foster Creek…
  17. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 17
    Christina Lake is a top tier reservoir 0 20 40 60 80 100 120 140 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Mbbls/d Daily production Production is shown on a gross basis.
  18. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 18
    0 20 40 60 80 100 120 175 global oil projects Oil sands SAGD projects Source: Goldman Sachs, Cenovus. Goldman Sachs defines breakeven as the US dollar equivalent WTI oil price required to achieve a 10% return. Cumulative peak…
  19. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 19
    Capital Tax & return (9% after-tax) Operating costs Royalties Blending & transport Light-heavy differential Supply cost (US$/bbl) Project 2010 2013 Foster Creek 40 - 50 35 - 45 Christina Lake 45 - 55 35 - 45 Narrows Lake 45 -…
  20. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 20
    $2 - $3/bbl Growth capital: ? Phase expansion (includes all infrastructure & initial wells) ? Phase debottlenecking & optimization ? Numerator for capital efficiency calculation $6 - $7/bbl Sustaining capital: ? All wells, pads,…
  21. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 21
    Foster Creek Christina Lake Narrows Lake Grand Rapids Telephone Lake Working interest 50% 50% 50% 100% 100% Potential size (Mbbls/d gross) 310 310 130 180 300+* Design SOR 2.1 1.7 2.1 SAGD 1.6 SAP 3.0 - 3.5 2.1 Supply cost (US$/bbl…
  22. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 22
    Technology development drives SAGD performance: ? Wedge Well? technology ? Blowdown boiler ? Electric submersible pumps ? SkyStrat? drilling rig ? Solvent aided process ? Dewatering process Driving innovation in oil sands through…
  23. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 23
    Wedge Well? technology commercialized in 2010 Technology details: ? < 0.1 average SOR ? First year production rate of 600 - 800 bbls/d at Foster Creek, current average of 400 bbls/d; 300 - 400 bbls/d at Christina Lake ?…
  24. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 24
    ? 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 by 5 - 10% ? Lowers emissions, water usage &…
  25. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 25
  26. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 26
    Borealis region Telephone Lake is another cornerstone asset Telephone Lake project area Steepbank & East McMurray Saskatchewan Alberta Telephone Lake commercial project: ? Regulatory approval expected Q2 2014 ? Expected initial…
  27. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 27
    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 displaced in the pilot area ? Pilot completed…
  28. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 28
    SAGD pilot update: ? Operating for 30 months ? Two well pairs are currently producing ? Second well pair SAGD conversion occurred in mid-February 2013 Commercial project: ? Regulatory approval expected in Q1 2014 ? 180,000 bbls/d…
  29. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 29
    Upstream operating cash flow 0% 20% 40% 60% 80% 100% 2010 2011 2012 2013 2014F 2015F Oil sands Conventional oil Natural gas Conventional oil includes Pelican Lake and NGLs. 2014F based on commodity price assumptions as outlined…
  30. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 30
    Conventional oil & gas: ? ~70% fee lands ? >20% IRR ? Payback less than 3 years ? Scalable & flexible capital program ? Diversification of product streams Pelican Lake: ? Water/polymer flood Weyburn: ? CO 2…
  31. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 31
    0.0 0.2 0.4 0.6 2010 2011 2012 2013 2014F $ billion Capital Operating cash flow 0 10 20 30 2010 2011 2012 2013 2014F Mbbls/d Production Operating cash flow is a non-GAAP measure. See advisory for information on Pelican Lake…
  32. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 32
    0 200 400 600 800 2010 2011 2012 2013 2014F Production Natural gas: ? Significant cash flow with minimal capital investment & low operating costs ? Primarily fee lands ? CBM recompletions have strong returns ? 2014F production…
  33. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 33
    Production Alberta pricing Transportation North American & global crude pricing Refining Global product pricing Participating in the value chain to expand margin Expanding margin through market access & integration
  34. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 34
    Wood River Refinery Borger Refinery ? Refineries have access to discounted crudes ? Wood River accesses multiple pipelines - Keystone, Express-Platte, Mustang, Ozark ? Borger has access to Canadian heavy, West Texas Sour & growing…
  35. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 35
    0.0 0.5 1.0 1.5 2009 2010 2011 2012 2013 2014F Capital Operating cash flow $ billion ? Feedstock advantage & heavy processing capacity drive cash flow ? Minimal annual maintenance capital of $150 - $160 million 2014F based on…
  36. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 36
    0 40 80 120 160 200 240 2011 2012 2013 2014F* Blended bitumen Blended conventional heavy *Expected net production capacity based on midpoints of the 2014 guidance document dated February 13, 2014. Blended conventional heavy oil…
  37. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 37
    ? West Coast: Trans Mountain - 11,500 bbls/d ? US Gulf Coast: Enbridge US Gulf Coast access - 75,000 bbls/d Keystone XL - 75,000 bbls/d ? East Coast: TCPL Energy East to Saint John, NB 200,000 bbls/d ? West Coast: Trans Mountain…
  38. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 38
    ? Begin receiving first of 825 coiled & insulated rail cars in Q4 ? Secured 30,000 bbls/d loading capacity between: ? USDG/Gibsons terminal (Hardisty) ? Canexus Bruderheim terminal (Edmonton) Targeting to exit 2014 with 30,000…
  39. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 39
    ? Supports infrastructure expansion for greater market access ? Provides secure access to new markets ? Defines costs for an agreed period ? Creates opportunity for preferred terms & tolling as anchor shipper Benefits of firm…
  40. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 40
    0 400 800 1,200 1,600 10.00 15.00 20.00 Refining operating cash flow sensitivities ? Operating cash flow $300 - $700 million* ? Capital $150 - $160 million ? Targeting 55% heavy crude input $1 change in crack spread = ~$65…
  41. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 41
    Operational ? Heavy oil production integrated with refining capacity ? Scalable conventional oil programs provide flexibility ? Portfolio approach to transportation Financial ? Financial strength to support growth plans ?…
  42. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 42
    Foster Creek 24% Christina Lake 26% Narrows Lake 7% New resource plays 6% Pelican Lake 8% Conventional oil 19% Refining 5% Natural gas 2% CVE wide 3% 2014F capital budget: $2.8 - $3.1 billion 2014F based on midpoints…
  43. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 43
    Annual capital allocation priorities: 1. Committed capital of ~$2.0 billion* ? support existing business operations ? progress approved expansions at multi-phase projects 2. Dividend payments ? ~$730 million in 2013 ? 10% increase…
  44. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 44
    6 5 4 3 2 1 0 2010 2011 2012 2013 2014F $ billions 2014F based on commodity price assumptions outlined in the February 13, 2014 guidance document. 2015F - 2023F based on future price assumptions as noted in the advisory. Cash flow is…
  45. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 45
    *Non-GAAP measures. See advisory. Ensure significant liquidity & long dated debt maturities ? US$4.75 billion in notes with weighted average maturity in excess of 15 years ? $3.0 billion committed undrawn credit facility maturing…
  46. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 46
    Target range Debt to adjusted EBITDA ratios 0% 10% 20% 30% 40% 2012 2013 2014F Debt to capitalization* Net debt to capitalization* Times Target range 0.0 0.5 1.0 1.5 2.0 2012 2013 2014F Debt to adjusted EBITDA* Net debt…
  47. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 47
    Crude unhedged 47% Natural gas unhedged? 7% Refining 12% Crude hedged 34% Hedges at December 31, 2013 Volume hedged Brent price $/bbl* Production 2014F Volume % hedged Crude 50,000 bbls/d 101.49US$ 199 Mbbls/d 25%…
  48. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 48
    ? Strong financial health ? Sustainable pace of development ? Reliable, predictable cash flow to support payments ? Ongoing capital discipline $/share Dividend growth requires: Cumulative dividend per period. Dividends are…
  49. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 49
    Steepbank East McMurray Telephone Lake Grosmont Grand Rapids Foster Creek Proper Narrows Lake West Kirby Winefred Lake Christina Lake Proper Wabiskaw BOREALIS REGION GREATER PELICAN REGION CHRISTINA LAKE REGION FOSTER CREEK…
  50. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 50
    February 13, 2014 Total Production (Mbbls/d) (1) 54 - 59 62 - 68 116 - 128 Operating cash flow ($ millions) (2) 870 - 970 920 - 1,020 1,790 - 1,990 Capital expenditures ($ millions) 680 - 760 750 - 820 210 - 230 1,640 - 1,810…
  51. March 2014 Investor Presentation – Cenovus Energy Inc. – slide 51
    Oil production (Mbbls/d) (1) 190 - 208 Natural gas production (MMcf/d) 450 - 490 Total cash flow ($ billions) (2) 3.0 - 3.7 - per common share, diluted ($/share) 3.95 - 4.90 Operating cash flow ($ billions) (2) 3.7 - 4.5 Total…

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