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Key Resource Play Conference Call Series – Encana Corp

Encana Corp · Nov 11, 2011 · 39 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. Key Resource Play Conference Call Series – Encana Corp – slide 1
    Encana Corporation 2011 Key Resource Play Conference Call Series Haynesville Eric Marsh | EVP, Encana Corporation & SVP, USA Division Paul Sander | VP, Mid-Continent Business Unit David Nicks | VP, USA Gas Marketing November 7,…
  2. Key Resource Play Conference Call Series – Encana Corp – slide 2
    Our Strategy & Tactics Having built a high-quality resource base, the greatest value creating proposition for our shareholders is to now deliver a sustainably higher growth rate and to do it at the lowest possible cost. A six…
  3. Key Resource Play Conference Call Series – Encana Corp – slide 3
    0 10 20 30 40 50 60 70 Annualized 2010 Production 2010 Reserves Res & ECR Comprehensive Disclosure Reserves and Resources (Tcfe) ? Best in class reserves and economic contingent resource disclosure ? Largest reserve and…
  4. Key Resource Play Conference Call Series – Encana Corp – slide 4
    Encana Corporation Vast Land Position: 11.7 Million Net Acres Horn River Greater Sierra Duvernay Cutbank Ridge Deep Basin Montney Bighorn Coalbed Methane Alberta Bakken Collingwood Jonah Niobrara DJ Texas Piceance…
  5. Key Resource Play Conference Call Series – Encana Corp – slide 5
    Low Cost Focus Advancing Resource Play Hub Design and Development Concentrated resource + Pad drilling + Manufacturing process = Resource play hub Schematic represents 4-6 square miles of reservoir accessed from a single surface…
  6. Key Resource Play Conference Call Series – Encana Corp – slide 6
    $0 $1 $2 $3 $4 $5 $6 $7 $8 2008 2009 2010 2011F 3-5 yr target Encana Historical Supply Cost Proven Track Record of Lowering Cost Structures $/MMBtu Including $0.30 G&A. 2011F represent initial projections Upper Quartile…
  7. Key Resource Play Conference Call Series – Encana Corp – slide 7
    Haynesville Shale Operations Overview 287 61 10 505 0 100 200 300 400 500 2008 2009 2010 2011F Production MMcfe/d Encana Acreage: 350,000 net as at December 31, 2010. 95 241 190 5 0 50 100 150 200 250 2008 2009…
  8. Key Resource Play Conference Call Series – Encana Corp – slide 8
    4 Haynesville Development Strategy * As at December 31, 2010; 3P is proved + probable + possible reserves; 3C is high estimate (C1 + C2 + C3). ** Supply cost is defined as the flat NYMEX price that yields an after tax risked IRR of 9%…
  9. Key Resource Play Conference Call Series – Encana Corp – slide 9
    Haynesville History of the Haynesville 61 287 505 10 0 100 200 300 400 500 600 2008 2009 2010 2011F Net Production (MMcfe/d) ? Haynesville and Mid-Bossier discovered by Encana in 2006 ? Largest producing gas play in…
  10. Key Resource Play Conference Call Series – Encana Corp – slide 10
    Haynesville ? Encana Leading the Way Resource Play Hub Program ? Superior safety performance ? Reduced environmental impact ? Repeatable execution efficiency ? Long lateral development ? Deep well development ? Completion…
  11. Key Resource Play Conference Call Series – Encana Corp – slide 11
    - 200 400 600 800 1,000 1,200 1,400 Aug-08 Nov-08 Feb-09 May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Gross Gas Rate, MMcf/D 14N 11W Sec 27 Total AMI + Creedence Haynesville Resource Play…
  12. Key Resource Play Conference Call Series – Encana Corp – slide 12
    Haynesville Resource Play Hub Drilling Spud to Rig Release Improvement (Days) 0 25 50 75 100 2008 LR 2009 LR 2010 RPH 2011F RPH 2012F Drilling Cost per Well Improvement ($MM) $0 $2 $4 $6 $8 $10 $12 2008 LR 2009 LR…
  13. Key Resource Play Conference Call Series – Encana Corp – slide 13
    Surface Hole 131/ 2? Hole @ 1,850? Fresh Water Inter? Hole 97/ 8? Hole @ 10,500? Water Base Mud Lateral Section 63/ 4? Hole @ 12,500 TVD, 16,500 MD? Oil Base Mud ? Fit-for-purpose drilling rigs ? Managed pressure drilling:…
  14. Key Resource Play Conference Call Series – Encana Corp – slide 14
    Haynesville Resource Play Hub Completions Average Completion Stages Pumped Per Crew Per Month 0 20 40 60 80 100 120 140 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 100% Improvement ? Reducing cost…
  15. Key Resource Play Conference Call Series – Encana Corp – slide 15
    North Louisiana Completions RPH 30% ? 2% ? 13% ? 7% ? Cost per 1000? Stages per Well Lateral Proppant Length Comparing 2011 to 2010 $4.50 $4.20 5.5 7.1 $0 $1 $2 $3 $4 $5 $6 $7 $8 2010 2011 Completion Cost ($MM)…
  16. Key Resource Play Conference Call Series – Encana Corp – slide 16
    Haynesville Continuous Optimization Bayou Well Services Simultaneous Operations X X X X X X X X X X X X X X X ? 2009 Short laterals and wide cluster spacing ? 3,600 feet and 70 feet cluster spacing ? 2010 Increased lateral…
  17. Key Resource Play Conference Call Series – Encana Corp – slide 17
    Haynesville Improving Well Performance 2011 2010 2009 7.3 16.7 5.5 14.1 4.1 13.7 # Stimulation Stages Per Well Average Proppant Per Well - MM lbs ? Completion designs improving well performance ? Design of experiment…
  18. Key Resource Play Conference Call Series – Encana Corp – slide 18
    Haynesville Understanding Subsurface Well Spacing ? Well density is 8 wells per section (80 acre) ? Testing trials of 6 well density with larger stimulation design ? Some 40 acre trials in 2011 to accelerate understanding ? Infill…
  19. Key Resource Play Conference Call Series – Encana Corp – slide 19
    Haynesville Reservoir Simulation Modeling Provides Insight RPH Average (29 wells) Simulation Type Curve 8 Well Density Model Crossection View Model Plan View ? Complex model allows for better match ? Partition reservoir and…
  20. Key Resource Play Conference Call Series – Encana Corp – slide 20
    Haynesville Resource Play Hub Long Lateral Current Pattern 640 acre, 4,600 ft lateral Previously undeveloped setback area Planned RPH Well Lease Retention Well New Planned Pattern 1,920 acre, 7,500 ft lateral Encana Leading the…
  21. Key Resource Play Conference Call Series – Encana Corp – slide 21
    Sabine ? Texas Haynesville Improved Completions and Extended Reach Laterals Extended Reach Laterals ? 7,500 feet laterals ? Longest/deepest wells in industry ? Coil run to total depth - 22,258 feet ? Stimulation size increased…
  22. Key Resource Play Conference Call Series – Encana Corp – slide 22
    Haynesville Supply Cost Evolution 6 5 4 3 2 1 0 2008 LR 2009 LR 2010 RPH 2011F RPH 2012F ? Continuous completion design evolution ? Optimum well density ? Slowback ? Deeper longer wells ? Ultra long laterals ? Cross Unit…
  23. Key Resource Play Conference Call Series – Encana Corp – slide 23
    Haynesville Mid-Bossier Update ? Well performance competitive with Haynesville ECA Select MB Wells 2010 Avg. Composite Haynesville *NGIP = Natural Gas Initially in Place; evaluated by Independent Qualified Reserves Evaluators -…
  24. Key Resource Play Conference Call Series – Encana Corp – slide 24
    ? Performing comparable to core North Louisiana ? Evidence for even stronger EUR potential ? Good porosity development ? Thicker intervals than both Sabine and North Louisiana East Texas Mid-Bossier Mid-Bossier Update ? Hoyt 2H ETX…
  25. Key Resource Play Conference Call Series – Encana Corp – slide 25
    Haynesville Future Direction ? Retain our high quality land ? Driving to $3 supply cost ? Resource Play Hub execution ? Longer wells ? Optimize spacing ? Completion evolution ? Mid-Bossier delineation ? New potential East Texas…
  26. Key Resource Play Conference Call Series – Encana Corp – slide 26
    Abundance of natural gas enables an energy plan that will include? ? Natural gas as a preferred fuel for power generation ? Natural gas as a transportation fuel ? Expanded natural gas use in industrial applications ? Accessing new…
  27. Key Resource Play Conference Call Series – Encana Corp – slide 27
    Electric Power 41% Industrial 20% Residential 7% Transportation 28% Commercial 4% 80 Bcfe/d 117 Bcfe/d Electric Power 31% Industrial 31% Residential 22% Transportation 1% Commercial 15% *U.S. data is as of 2010;…
  28. Key Resource Play Conference Call Series – Encana Corp – slide 28
    0 50 100 150 200 250 300 350 Current Energy Use Current Natural Gas Consumption 2020F Consumption 2030F Consumption Residential Commercial Industrial Electric Power Transportation *U.S. data is as of 2010; Canadian data is as…
  29. Key Resource Play Conference Call Series – Encana Corp – slide 29
    Natural Gas Demand Advocacy in Canada & USA Economic and Environmental Benefits of Natural Gas ? Trade Organization Leadership ? Member of ANGA, CNGI, NGVA, CNGVA, CNGVC, WNGIC ? Formed Clean American Transportation Alliance (ANGA &…
  30. Key Resource Play Conference Call Series – Encana Corp – slide 30
    Haynesville Shale A Top-tier Asset in a Dynamic Market Region ? Haynesville production has grown to approximately 6.5 to 7.0 Bcf/d in the past 5 years ? The asset: ? Is highly competitive on a cost basis ? Is one of the largest gas…
  31. Key Resource Play Conference Call Series – Encana Corp – slide 31
    Source: Encana, NYMEX; Note: Basis values represent the forward market as of October 21, 2011. MS AR TX LA OK Haynesville Haynesville is very well connected to numerous liquid trading hubs and growing demand centers Henry Hub…
  32. Key Resource Play Conference Call Series – Encana Corp – slide 32
    Source: Encana Freeport LNG MS AR TX LA OK Haynesville Sasol GTL Plant Haynesville is within 200 miles of one of the largest, and fastest-growing, natural gas demand centers Sabine Lake Charles LNG Pass LNG U.S. Gulf Coast…
  33. Key Resource Play Conference Call Series – Encana Corp – slide 33
    Source: Encana Haynesville Natural gas demand for power generation in the South could increase by 5 to 11 Bcf/d by 2020 Haynesville Well Positioned To Serve Growing Power Demand in the South 3-9 2 5-11 8 6 4 2 0 10 12…
  34. Key Resource Play Conference Call Series – Encana Corp – slide 34
    Haynesville Shale Critical to North America?s Global Energy Competitiveness ? We have seen global recognition of the low-cost natural gas environment in North America ? Given this we expect strong medium and long-term demand growth…
  35. Key Resource Play Conference Call Series – Encana Corp – slide 35
    Take a Closer Look Strategically Positioned to Excel ? We are ? The leading North American resource play company ? Pursuing the greatest long-term value creation for shareholders ? Committed to responsible financial stewardship ?…
  36. Key Resource Play Conference Call Series – Encana Corp – slide 36
    Haynesville Video To view a video of our Haynesville operations, please visit the following link: http://www.encana.com/videos/investor/haynesville-tour.wmv
  37. Key Resource Play Conference Call Series – Encana Corp – slide 37
    2011F ENCANA CORPORATE GUIDANCE US$, US Protocols June 21, 2011 2011F Cash Flow ($ billions, except per share amounts) Total Cash Flow(1)(2)(3) 4.0 - 4.3 - per common share, diluted ($/share) 5.40 - 5.90 Upstream Operating Cash…
  38. Key Resource Play Conference Call Series – Encana Corp – slide 38
    2011F Operating Costs (annual average) Total Operating and Administrative Costs ($/Mcfe) 1.15 - 1.20 Other DD&A, Upstream ($/Mcfe) 2.60 - 2.65 Sensitivities(3) ($ millions) $0.50/Mcf increase in the NYMEX natural gas price 220 170…
  39. Key Resource Play Conference Call Series – Encana Corp – slide 39
    2011F Key Resource Play Information October 20, 2011 Production Capital Wells Planned (MMcfe/d) ($MM) (#) Jonah 280 500 70 Piceance 525 450 165 Texas 340 375 60 Haynesville 505 980 85 Greater Sierra(1) 350 260 30 Cutbank…

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