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January 2012 Investor Presentation – Cenovus Energy Inc.

Cenovus Energy Inc. · Jan 2, 2012 · 66 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. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 1
    January, 2012 Cenovus Energy New ideas. New approaches.
  2. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 2
    2011 Verts ALBERTA SASKATCHEWAN Borealis Region Christina Lake Region Foster Creek Region Pelican Lake Region Weyburn Shaunavon Viking Bakken Alberta oil & gas MANITOBA Cenovus: Building from a strong base Tickers ?…
  3. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 3
    0 100 200 300 400 500 2010 2011F 2012F 2013F 2014F 2015F 2016F 2017F 2018F 2019F 2020F 2021F Bitumen Pelican Lake Other oil & NGLs Mbbls/d Volumes are shown before royalties and net to CVE. 2011F based on the October 27, 2011…
  4. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 4
    0 60 120 180 2010 2011F 2012F Other oil & NGLs Pelican Lake Oil sands Building on our track record Volumes are shown before royalties and net to CVE. 2011F based on the October 27, 2011 guidance document. 2012F based on midpoints…
  5. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 5
    8 6 4 2 0 Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer CVE FC CVE CL ? Lower capital cost ? Lower operating cost ? Smaller surface footprint ? Lower energy usage ? Lower emissions ? Less water usage Low SOR…
  6. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 6
    Leading capital efficiency Foster Creek $/bbl/d $/bbl/d Christina Lake Capital efficiency is calculated based on production design capacity for each phase. *Foster Creek F,G&H expectations reflect greenfield expansion and design…
  7. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 7
    Phased design approach ? Template design ? 4 boiler packages ? same for Foster Creek and Christina Lake ? Generally 3 phases designed together ? First project construction takes ~30 months ? following 2 phases follow 12…
  8. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 8
    2012F - Foster Creek ? 53 ? 57 Mbbls/d of production ? $650 ? $700 MM of capital ? $11.25 ? $12.45/bbl operating cost ? 2.0 ? 2.2 SOR
  9. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 9
    0 20 40 60 80 100 120 1-Dec-10 1-Mar-11 1-Jun-11 1-Sep-11 1-Dec-11 - 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Focusing on operational excellence Turnaround Mbbls/d Production is shown on a gross basis. ISOR Capacity Foster…
  10. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 10
    2012F - Christina Lake ? 26 ? 29 Mbbls/d of production ? $475 ? $525 MM of capital ? $13.00 ? $14.35/bbl operating cost ? 1.9 ? 2.1 SOR
  11. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 11
    0 10 20 30 40 50 60 1-Dec-10 1-Mar-11 1-Jun-11 1-Sep-11 1-Dec-11 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 Turnaround Mbbls/d Improving start-up performance Production is shown on a gross basis. ISOR Capacity…
  12. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 12
    2012F - Pelican Lake ? 23 ? 26 Mbbls/d of production ? $525 ? $575 MM of capital ? $14.55 ? $16.10/bbl operating cost
  13. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 13
    Volumes are shown before royalties. 2011F based on commodity price assumptions as outlined in the October 27, 2011 guidance document. 2012F based on midpoints of December 7, 2011 guidance document. 2013F through 2020F based on future…
  14. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 14
    2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Telephone Lake* Grand Rapids Narrows Lake Advancing our emerging projects Regulatory approval Construction Steam & production Steam and production includes ~6 months…
  15. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 15
    Commercializing one technology per year 2004 2006 2008 2010 2012 2014 2016 ESP (phase 2) New drilling method Combustion (AIDROH) Confidential project Confidential project Confidential project Warm Lime Softening Confidential…
  16. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 16
    Managing our conventional assets ALBERTA SASKATCHEWAN Viking Bakken Shaunavon Alberta oil & gas Weyburn Cenovus land at Dec. 31, 2010 with the exception of Viking which was acquired in 2011. 2012 highlights: ? Growing liquids…
  17. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 17
    Refining assets are key to integration ? Wood River ? 356 Mbbls/d crude capacity ? 240 Mbbls/d heavy crude ? 85% clean product yield ? Borger ? 146 Mbbls/d crude capacity ? 35 Mbbls/d heavy crude ? 89% clean product yield ? 2012…
  18. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 18
    Target range 0.0 0.5 1.0 1.5 2.0 2010 2011F 2012F 2013F 2014F 2015F Target range 0% 10% 20% 30% 40% 2010 2011F 2012F 2013F 2014F 2015F Balance sheet strength provides capacity Debt to Capitalization* Debt to Adjusted…
  19. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 19
    Building NAV Dividend growth Financial strength Project execution Focused on increasing total shareholder return Oil resource base Building NAV
  20. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 20
    Cenovus?s value pledge ? December 2011 ? Deliver on commitments ? Achieve step change in net asset value ? Sustain decades of growth with manufacturing model Focused on increasing total shareholder return
  21. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 21
    Delivering on our commitments 2011 Q4 Q3 Q2 Q1 Completed start up of CORE project at Wood River Submit Grand Rapids application Submit revised Telephone Lake application Achieved first production at Christina Lake C Sanctioned…
  22. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 22
    Advancing oil growth with strong execution 2012 Q4 Q3 Q2 Q1 Achieve first production at Christina Lake D Start construction of Narrows Lake A Pursue additional oil growth opportunities from conventional oil Demonstrate stable &…
  23. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 23
    0 25 50 75 100 125 150 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011F Foster Creek Christina Lake Mbbls/d 5 yr CAGR (2006?10) ~29% Production is shown before royalties and on a gross basis. Cenovus SAGD…
  24. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 24
    0 100 200 300 400 500 2010 2011F 2012F 2013F 2014F 2015F 2016F 2017F 2018F 2019F 2020F 2021F Emerging plays Christina Lake Foster Creek Annual production Year-end production capacity (Mbbls/d) Growing bitumen Volumes are…
  25. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 25
    Generating sustainable growth for decades ? Increased resource base ? Evolved technology to build value ? Improved our execution 0 100 200 300 2009 2010 2011F 2012F 0 200 400 600 2008 2009 2010 2011 2012F 2013F 2014F Foster…
  26. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 26
    Building NAV by converting resources Discovered BIIP 56 Bbbls Undiscovered BIIP* 82 Bbbls 1P 2P 2C 6.1 Bbbls 137 Bbbls 7.8 Bbbls *Undiscovered BIIP is unrisked. Volumes are shown before royalties and on a net basis.
  27. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 27
    ? Utilize dedicated in house construction management teams ? Employ multiple small contractors ? Develop projects in staged, manageable phases ? Operate assembly-line drilling & completions ? Reduce execution timeline through…
  28. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 28
    Advancing oil sands projects Grand Rapids* Q4-2011 2017F 180,000 Narrows Lake* Q2-2010 2016F 130,000 Future phases 45,000 ? 65,000 H Q2-2009 2016F 35,000 40,000 A - E 120,000 A - C 58,000 Christina Lake Foster Creek Prior New…
  29. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 29
    Volumes are shown on a 100% basis. Foster Creek overview ? Pilot project began in 1996 ? Became the industry?s first commercial SAGD project in 2001 ? largest producing SAGD operation in Alberta ? 120,000 bbls/d of production…
  30. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 30
    Christina Lake overview ? Pilot project began in 2000 ? First production in 2002 ? 58,000 bbls/d of production capacity (phases A ? C) ? ~31 wells currently producing ? Total planned capacity of ~258,000 bbls/d Volumes are shown on…
  31. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 31
    Oil sands project comparison Land position 70,720 12,480 12,960 52,480 36,480 (net acres) Core area well 8 ? 26 8 ? 40 11 ? 26 1 ? 8 0 ? 16 density (wps) Supply cost 30 ? 40 45 ? 55 45 ? 55 55 ? 65 55 ? 65 (US$/bbl WTI) 1.3 3.0 ?…
  32. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 32
    Bitumen contingent resources East McMurray 0.7 0.7 Borealis 5.4 0.9 0.7 1.1 0.3 0.5 0.5 0.8 2010 2009 Total Pelican Lake Christina Lake Foster Creek Winefred Lake 0.4 Core & other areas 0.4 Narrows Lake 0.5 Best…
  33. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 33
    Timeline - illustrative SAGD phase (1) Receipt of regulatory approval is variable. Assumes construction starts when approval is received. (2) Construction time is variable depending on several factors. Commissioning, steam and…
  34. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 34
    Standard SAGD well pair and steam chambers coalesce Wedge Well producer ? 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…
  35. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 35
    0 20 40 60 80 100 120 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 1.6 1.9 2.2 2.5 2.8 3.1 3.4 Total production Wedge Well production ISOR Technology improves performance Wedge WellTM technology reduced SOR: 2.5 - 2.2…
  36. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 36
    Blowdown boiler commercialized in 2011 ? Utilizes boiler water (blowdown) as feed water for second boiler ? Generates more steam from the same water ? Improves heat recovery ? Lowers operating costs & emissions ? Improves steam…
  37. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 37
    Developing technology to build value 1. ESP (phase 2) ? early stage enhancement of pump technology 2. CondenSAP ? a condensate based Solvent Aided Process 3. SAP ? butane based, being piloted at Christina Lake, commercial plans for…
  38. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 38
    Cenovus?s Solvent Aided Process (SAP) ? SAP versus SAGD metrics ? 30% production rate improvement ? 15% incremental total oil recovery ? 3% reduction in annual fuel gas usage ? 0.05 bbls solvent (butane) purchased per bbl…
  39. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 39
    2012 highlights: ? Focus on tight oil drilling program ? Connect key plays to centralized facilities & pipelines ? Shaunavon ? 42 wells ? initiate down-spacing & water flood pilots ? Bakken ? 4 wells ? initiate water-flood & CO 2…
  40. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 40
    Optimizing natural gas operations ? Flexible, scalable, reliable operations ? Low operating costs ? Low royalties ? mostly fee land ? 2012 operating cash flow* $550 ? $600 MM ? 2012 capital $80 ? $90 MM ? maintenance capital &…
  41. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 41
    Lower Shaunavon ? 54 net sections ? 53 producing wells in Q3-2011 ? ~5 - 10% recovery factor ? 20 - 25? API medium oil ? 1,571 bbls/d (2010 exit) ? 60 horizontal wells with multistage fracs (2011F) 0 50 100 150 200 0 5 10 15…
  42. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 42
    Southeast Saskatchewan Bakken ? Overview ? 40? - 45? API light oil ? ~100 - 125 Mbbls/well ? ~$2.0 ? 3.0 MM per well (drill, complete, tie-in) ? Bakken (Viewfield & Estevan area) ? 140+ undeveloped sections (fee & crown land) ? 13…
  43. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 43
    Weyburn gross production history 0 10 20 30 40 Jan-75 Jan-85 Jan-95 Jan-05 Primary & waterflood Vertical infills Pre CO2 Hz infills Waterflood improvement CO2 EOR Mbbls/d EOR = enhanced oil recovery.
  44. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 44
    CORE completion adds significant value ? Objectives ? leverage Wood River?s strategic location ? become a major processor of bitumen-blended heavy oil ? Value drivers ? reduces input costs ? increases clean product yield ?…
  45. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 45
    0 20 40 60 80 100 2011F 2012F Gasoline Distillate Other % Refined products* Increasing heavy oil processing & clean product yield 0 20 40 60 80 100 2011F 2012F Heavy Medium sour Light % Crude* *Illustrative crude slates…
  46. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 46
    Reducing feedstock costs Clean products Other products WTI Crack spread Crude cost advantage Price Average cost of crude Crude cost advantage increases total margin available Crude cost advantage
  47. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 47
    2012 refinery margin sensitivities 0 300 600 900 10.00 12.00 14.00 16.00 18.00 20.00 22.00 Net operating cash flow* ($ MM) Market crack (US$/bbl) L - H differential $15.00/bbl L - H differential $10.00/bbl Based on…
  48. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 48
    Understanding refinery performance Crude 3-2-1 Refinery Actual refinery Gasoline Diesel Other 1.65 bbls 0.90 bbl 1 bbl 3 bbls 0.45 bbl Clean product yield ? 85% 2 bbls Market cracks do not account for other product…
  49. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 49
    Market vs realized crack spreads Crude advantage increases total margin available ? effectively increasing realized crack spread 5 0 10 15 20 25 Market crack Crude advantage 3-2-1 discount Other products Realized crack $/bbl
  50. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 50
    Increasing demand for Canadian heavy crude Refining capacity by 2020 ? MMbbls/d Light sweet Light sour Heavy sour Source: P&G Crude Oil & Oilsands Outlook 2011. PADD III expected to be the biggest growth market Canada ? 2.1 Heavy…
  51. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 51
    Supporting pipelines to new markets Source: Pipeline company publically available information. Casper Toledo Sarnia Edmonton Cushing San Francisco Los Angeles Hardisty Houston Chicago Anacortes Superior Montr?al Vancouver…
  52. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 52
    Environmental Financial Operational Integrating environment into business planning Going beyond compliance Self-funding model Natural gas is a financial asset & provides a natural hedge Hedging protects capital programs Ongoing…
  53. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 53
    Pipelines essential to Canadian oil growth - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Mbbls/d Enbridge Northern Gateway TMPL…
  54. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 54
    Price Exposed 165 MMcf/d (25%) NYMEX Fixed US$ 5.82/Mcf 351 MMcf/d (53%) AECO/NYMEX Fixed & internal use* US$5.05/Mcf** 408 MMcf/d (70%) Unhedged* 180 MMcf/d (30%) Unhedged* 126 Mbbls/d (77%) WTI NYMEX Fixed…
  55. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 55
    Key credit metrics & ratings Credit metrics Total debt* $3,617 $3,432 Debt to adjusted EBITDA* 1.1x 1.3x 1.0 ? 2.0x Debt to capitalization* 28% 29% 30 ? 40% Target Q3 2011 Q4 2010 Range *Non-GAAP measures. See advisory. Credit…
  56. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 56
    Integrated oil drives operating cash flow* Price Exposed 165 MMcf/d (25%) *Operating cash flow is a non-GAAP measure. See advisory. 0% 20% 40% 60% 80% 100% 2010 2011F 2012F Foster Creek & Christina Lake Pelican Lake…
  57. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 57
    Building flexibility into capital programs 2011F based on the October 27, 2011 guidance document. 2012F based on the December 7, 2011 guidance document. 2013F through 2021F based on future price assumptions as noted in the advisory. 7…
  58. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 58
    CVE wide 6% Refining 5% Pelican Lake 17% New resource plays 12% Christina Lake 15% Foster Creek 21% Conventional oil 21% Natural gas 3% Capital investment focused on oil growth 2012 capital budget: $3.1 - $3.4 B ?…
  59. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 59
    Our dividend commitment ? Dividend growth requires: ? strong financial health ? sustainable pace of development ? reliable, predictable cash flow to support payments 0% 1% 2% 3% 4% 5% COS HSE CVE SU IMO CNQ Source: Bloomberg,…
  60. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 60
    December 7, 2011 Foster Creek Christina Lake Total Production (Mbbls/d) 53 - 57 26 - 29 79 - 86 Operating cash flow ($ millions) (1) 910 - 1,010 370 - 410 1,280 - 1,420 Capital expenditures ($ millions) 650 - 700 475 - 525 1,125 -…
  61. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 61
    Oil & liquids Natural gas Total Production Oil & liquids (Mbbls/d) 53 - 59 53 - 59 Natural gas (MMcf/d) 575 - 600 575 - 600 Operating cash flow ($ millions) (1) 1,000 - 1,115 550 - 600 1,550 - 1,715 Capital expenditures ($ millions)…
  62. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 62
    Oil & liquids Natural gas Total Production Oil & liquids (Mbbls/d) 53 - 59 53 - 59 Natural gas (MMcf/d) 575 - 600 575 - 600 Operating cash flow ($ millions) (1) 1,000 - 1,115 550 - 600 1,550 - 1,715 Capital expenditures ($ millions)…
  63. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 63
    December 7, 2011 Total cash flow ($ billions) (1) 2.9 - 3.5 - per common share, diluted ($/share) 3.80 - 4.60 Operating cash flow ($ billions) (1) 3.6 - 4.2 Total capital expenditures ($ billions) (5) 3.1 - 3.4 Administrative…
  64. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 64
    October 27, 2011 Q4 2011 2011 Foster Creek Production (Mbbls/d) 56 55 Operating cash flow ($ millions) (1) 195 - 215 760 - 780 Capital expenditures ($ millions) 125 - 135 415 - 425 Operating costs ($/bbl) Fuel 2.65 2.30 Non-fuel…
  65. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 65
    Q4 2011 2011 Production (Mbbls/d) 22 21 Operating cash flow ($ millions)(1) 100 - 110 335 - 345 Capital expenditures ($ millions) 110 - 120 295 - 305 Operating costs ($/bbl) (2) 13.00 14.00 Effective royalty rates (%) 10 - 11 11 -…
  66. January 2012 Investor Presentation – Cenovus Energy Inc. – slide 66
    October 27, 2011 Q4 2011 2011 Total cash flow ($ billions)(1) 0.9 - 1.0 3.3 - 3.4 - per common share, diluted ($/share) 1.20 - 1.35 4.35 - 4.50 Operating cash flow ($ billions)(1) 1.0 - 1.2 3.8 - 4.0 Total capital expenditures ($…

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