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October 2014 Investor Presentation – Cenovus Energy Inc.

Cenovus Energy Inc. · Oct 3, 2014 · 49 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. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 1
    A different kind of oil sands
  2. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 2
    A different kind of oil sands Focus on total shareholder return & building net asset value ? Top-tier oil sands portfolio generates predictable, reliable growth ? Strong project execution & innovation drives performance ? Strategic…
  3. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 3
    Strong integrated portfolio TSX, NYSE | CVE Enterprise value C$28 billion Shares outstanding 757 MM 2014F production Oil & NGLs Natural gas 199 Mbbls/d 470 MMcf/d 2013 proved & probable reserves 3.2 BBOE Bitumen Economic…
  4. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 4
    Continuing to execute our 10-year plan Q1 Grow reserves & contingent resources ? Anticipate Grand Rapids regulatory approval (previously Q4 2013) ? Drill approximately 300 stratigraphic test wells & assess results ? Progress Narrows…
  5. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 5
    Established base of high quality resource ? Minimal exploration risk ? Low F&D costs ? Large scale ? Predictable production ? High recovery factors ? Opportunity to advance technology Undiscovered BIIP 50 Bbbls Discovered BIIP…
  6. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 6
    Updated bitumen contingent resources 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 commercially viable to produce…
  7. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 7
    Executing on our business plan 0 100 200 300 2009 2010 2011 2012 2013 2014F Oil sands Pelican Lake Conventional oil & NGLs Mbbls/d Volumes are shown before royalties and net to Cenovus. 2014F based on midpoints of the February…
  8. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 8
    Oil sands Our operations include steam-assisted gravity drainage (SAGD) oil sands projects in northern Alberta. Shown here are steam generation facilities at our Christina Lake SAGD project, one of our cornerstone oil sands assets.
  9. October 2014 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 Represents first production target for phase F. Phase G first production expected in 2015 and phase H in 2016.…
  10. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 10
    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…
  11. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 11
    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…
  12. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 12
    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…
  13. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 13
    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 ? bringing on 42 new wells…
  14. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 14
    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: ?…
  15. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 15
    Focusing on consistent operations 0 20 40 60 80 100 120 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 Mbbls/d Foster Creek Daily production…
  16. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 16
    Demonstrating top tier reservoir performance 0 20 40 60 80 100 120 140 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 Mbbls/d Phase D ~6…
  17. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 17
    Cenovus SAGD is among the lowest supply cost globally 0 20 40 60 80 100 120 175 global oil projects Oil sands SAGD projects Cumulative peak production MMbbls/d Cenovus supply cost US$35 - $65/bbl Global average supply cost…
  18. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 18
    Committed to maintaining low capital cost structure Capital Target total capital ~$8 - $10/bbl full cycle $2 - $3/bbl Growth capital: ? Phase expansion (includes all infrastructure & initial wells) ? Phase debottlenecking &…
  19. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 19
    SAGD portfolio provides development opportunity *Joint regulatory application for a 90,000 bbls/d project was submitted December 2011. **Best estimate. See advisory. Includes Christina Lake core area only. Foster Creek Christina Lake…
  20. October 2014 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. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 21
    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 ?…
  22. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 22
    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 ? 71 currently producing ? expect 36…
  23. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 23
    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…
  24. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 24
    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…
  25. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 25
    Telephone Lake is another cornerstone asset Borealis region Telephone Lake project area Steepbank & East McMurray Saskatchewan Alberta Telephone Lake commercial project: ? Regulatory approval expected second half 2014 ?…
  26. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 26
    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…
  27. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 27
    Taking the next steps at Grand Rapids Grand Rapids Pilot location Central plant facility site SAGD pilot update: ? Operating since 2011 ? Two well pairs currently producing Commercial project: ? Received regulatory approval Q1…
  28. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 28
    Significant cash flow helps fund oil sands growth 0 200 400 600 800 1,000 Conventional oil Pelican Lake Natural gas Capital expenditures Operating cash flow $ millions 2014F: expected to generate $825 MM cash flow in excess of…
  29. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 29
    Pelican Lake expected to be cash flow positive in 2014 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 Mobile Wabiskaw: ? 2.1 billion…
  30. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 30
    Natural gas ? a natural hedge with significant cash flow Natural gas: ? Significant cash flow with minimal capital investment & low operating costs ? Primarily fee lands ? CBM recompletions have strong returns ? 2014F production…
  31. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 31
    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…
  32. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 32
    Delivering significant cash flow from the downstream ? Feedstock advantage & heavy processing capacity drive cash flow ? Minimal annual maintenance capital of $150 ? $160 million 0.0 0.5 1.0 1.5 2009 2010 2011 2012 2013 Capital…
  33. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 33
    Protecting against wider heavy oil differentials 0 40 80 120 160 200 240 2011 2012 2013 2014F* Blended bitumen Blended conventional heavy Managed price exposure: ? Hedging contracts ? Transportation commitments ? Marketing…
  34. October 2014 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 Adding pipeline commitments: ? US Gulf Coast: Enbridge US Gulf Coast access ? 75,000 bbls/d Keystone XL ?…
  35. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 35
    2014 rail transportation plans ? 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) PADD IV…
  36. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 36
    Benefitting from global price exposure *2014F production is based on midpoints of the guidance document dated February 13, 2014. Heavy crude oil includes Pelican Lake production and medium oil production which is exposed to heavy price…
  37. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 37
    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…
  38. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 38
    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…
  39. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 39
    Disciplined approach to capital allocation Annual capital allocation priorities: 1. Committed capital of ~$2.0 billion* ? support existing business operations ? progress approved expansions at multi-phase projects 2. Dividend…
  40. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 40
    Strong cash flow profile supports capital program 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. Cash flow is a non-GAAP measure. See…
  41. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 41
    Ensuring financial strength to support oil growth ? Ensure significant liquidity & long dated debt maturities ? US$4.75 billion in notes with weighted average maturity in excess of ~17 years ? $3.0 billion committed undrawn credit…
  42. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 42
    Debt information as at June 30, 2014 Foreign exchange rate: US$/C$: $0.9367 as at June 30, 2014. *Excludes debt discounts and transaction costs. Total debt outstanding US ($ millions) CAD equivalent ($ millions) 5.70% due October 15,…
  43. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 43
    Target range 0% 10% 20% 30% 40% 2012 2013 2014F Debt to capitalization* Net debt to capitalization* Target range 0.0 0.5 1.0 1.5 2.0 2012 2013 2014F Debt to adjusted EBITDA* Net debt to adjusted EBITDA* Debt metrics remain…
  44. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 44
    As a percentage of cash flow Mitigating commodity price risk Crude unhedged 49% Natural gas hedged Natural gas unhedged(1) 3% 3% Refining 11% Crude hedged 34% (1) 173 MMcf/d of internal use & long-term fixed price sales. (2)…
  45. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 45
    Committing to dividend growth Dividend growth requires: ? Strong financial health ? Sustainable pace of development ? Reliable, predictable cash flow to support payments ? Ongoing capital discipline $/share 0.00 0.20 0.40 0.60…
  46. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 46
    Corporate responsibility performance highlights in 2013 DJSI World Index: only Canadian oil & gas company included Maclean?s Top 50 Socially Responsible Corporations in Corporate Knight?s Global Canada 100 IR Magazine: Best…
  47. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 47
    Steepbank East McMurray Telephone Lake Grosmont Grand Rapids Foster Creek Proper Narrows Lake West Kirby Winefred Lake Christina Lake Proper Wabiskaw BOREALIS REGION GREATER PELICAN REGION CHRISTINA LAKE REGION FOSTER CREEK…
  48. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 48
    February 13, 2014 - C$, before royalties 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…
  49. October 2014 Investor Presentation – Cenovus Energy Inc. – slide 49
    Operating cash flow ($ millions) (2)(5) 300 - 700 Capital expenditures ($ millions) 150 - 160 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…

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