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RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc.

Cenovus Energy Inc. · Jul 13, 2011 · 60 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. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 1
    RBC Capital Markets Global Energy and Power Conference Harbir Chhina Executive Vice-President, Oil Sands New York ? June 6, 2011
  2. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 2
    Defining Cenovus Focus on total shareholder return & building net asset value ? World class inventory of oil opportunities ? long history of operating excellence ? industry leading portfolio of oil projects ? huge discovered bitumen…
  3. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 3
    Cenovus: Building from a strong base Tickers ? TSX, NYSE CVE Enterprise value $30 billion Shares outstanding 754 MM 2011F production Oil & NGLs 132 Mbbls/d Natural gas 650 MMcf/d 2010 proved & probable reserves 2.4 BBOE Bitumen…
  4. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 4
    0 100 200 300 400 500 2010 2011F 2012F 2013F 2014F 2015F 2016F 2017F 2018F 2019F 2020F 2021F Bitumen (prior) Pelican Lake (prior) Other oil & NGLs (prior) Bitumen (new) Pelican Lake (new) Other oil & NGLs (new) Manufacturing…
  5. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 5
    0 25 50 75 100 125 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.…
  6. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 6
    4 Meeting our commitments 2010 Initiated sanctioning process for Foster Creek F, G & H Received regulatory approval for Grand Rapids pilot project Began steaming at Grand Rapids pilot Announced organizational structure aligned with…
  7. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 7
    0% 20% 40% 60% 80% 100% 2010 2012F 2014F Oil, liquids & refining Natural gas Focused on oil 2012F and 2014F based on future price assumptions as noted in the advisory. Percent of operating cash flow ? Grow oil production by…
  8. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 8
    Sanction Foster Creek F, G & H Construction of Foster Creek F, G & H Accelerate polymer flood at Commence regulatory applications Grand Rapids Pelican Lake Development area expansion Christina Lake E, F & G Stratigraphic wells…
  9. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 9
    Milestones in building value *Represents expected timelines subject to regulatory and/or partner approvals. 2015F* GOAL 400,000 - 500,000 bbls/d of project approvals* Q2 Q1 Q4 Q3 Q2 Q1 Initiate sanctioning process for Narrows…
  10. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 10
    Updated 10-year plan ? What?s changed? ? accelerating oil sands timelines ? performance exceeding expectations ? increasing oil sands phase size at Foster Creek ? production growth driven by SOR performance ? growing conventional…
  11. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 11
    Accelerated project schedules Christina Lake Foster Creek Prior New Prior New Future phases 2013F 2019F 2017F 25,000 45,000 ? 65,000 H Q2-2009 2017F 2016F 30,000 35,000 G Q2-2009 2016F 2015F 30,000 35,000 F Q2-2009 2014F 30,000…
  12. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 12
    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 (new) Annual production (prior) Year-end production capacity (Mbbls/d)…
  13. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 13
    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…
  14. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 14
    Leading capital efficiency Foster Creek 0 10,000 20,000 30,000 A 20Mbbls/d B 10Mbbls/d C 30Mbbls/d D&E 60Mbbls/d FG&H* 90Mbbls/d Actual costs Projected costs Range 0 10,000 20,000 30,000 A&B 18Mbbls/d CD&E…
  15. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 15
    2011F - Foster Creek Complete planned turnaround Q2 Sanction phases F, G & H (received regulatory approval Sept. 2010) Q1 Execute strat well program ? 110 gross wells drilled ? 51 - 54 Mbbls/d of production ? $375 - 425 MM of…
  16. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 16
    2011F - Christina Lake ? 9 ? 11 Mbbls/d of production ? $375 - 425 MM of capital ? 2.4 ? 2.7 SOR* ? $18.65 ? 19.40/bbl operating costs* ? Continue construction on phase D *Op. costs/SOR include temporary impact of phase C start…
  17. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 17
    Standard SAGD well pair and steam chambers coalesce Wedge wells Wedge Wedge wells well producer ? < 0.1 average SOR ? 600 ? 800 bbls/d average production rate at Foster Creek; 300 ? 400 bbls/d at Christina Lake ? Acceleration…
  18. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 18
    Increased recovery with wedge wells Illustrative well performance 0% 20% 40% 60% 80% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 Percent recovery Incremental recovery with wedge wells Accelerated recovery with wedge wells Percent…
  19. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 19
    2011F - Pelican Lake ? 21 - 23 Mbbls/d of production ? $275 - 325 MM of capital ? $14.00 ? 15.00/bbl operating cost ? 57 gross strat wells drilled in Q1 ? Start drilling infill patterns ? Potentially accelerate drilling program 5…
  20. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 20
    Opportunity to apply technology to maintain production beyond 2017 Advancing Pelican Lake production Mbbls/d Volumes are shown before royalties. 2011F based on commodity price assumptions as outlined in the April 27, 2011 guidance…
  21. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 21
    2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Steepbank West Kirby East McMurray Foster Creek Other Winefred Lake Telephone Lake Grand Rapids Narrows Lake Portfolio of additional opportunities Regulatory…
  22. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 22
    0 50 100 150 2010 2011F average 2011F December exit Conventional oil & NGLs Pelican Lake Foster Creek Christina Lake Mbbls/d Production is shown before royalties and on a net basis. 2011F average is based on midpoints of April 27,…
  23. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 23
    Pipeline projects and expansions Casper Sarnia Edmonton Cushing San Francisco Hardisty Anacortes Express/Platte Spearhead Mobil Pegasus TransMountain (TMPL) Enbridge Monarch (Q4 2013) Keystone Enbridge Northern Gateway…
  24. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 24
    ? Top quality refinery assets ? Wood River (Post-CORE) ? 356 Mbbls/d crude throughput ? 240 Mbbls/d heavy crude capacity ? ~85% clean product yield ? Borger ? 146 Mbbls/d crude throughput ? 35 Mbbls/d heavy crude capacity ? ~89%…
  25. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 25
    Wood River CORE project Increases overall capacity ? 50 Mbbls/d of increased crude throughput ? 130 Mbbls/d of increased heavy crude capacity ? lowers crude input costs ? produces a greater proportion of high value clean…
  26. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 26
    Self-funding organic growth 7 6 5 4 3 2 1 0 2010 2011F 2012F 2013F 2014F 2015F $ billions Committed capital Committed cash flow Discretionary capital Discretionary cash flow 2011F based on commodity price assumptions as outlined in…
  27. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 27
    Target range Target range 0.0 1.0 2.0 3.0 2010 2011F 2012F 2013F 2014F 2015F 0% 20% 40% 60% 2010 2011F 2012F 2013F 2014F 2015F Continuing balance sheet strength Debt to Capitalization Debt to Adjusted EBITDA Percentage Times…
  28. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 28
    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% HSE COS CVE SU IMO CNQ Source: Bloomberg,…
  29. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 29
    Cenovus Energy ? building for the future Focus on total shareholder return & building net asset value ? World class inventory of oil opportunities ? long history of operating excellence ? industry leading portfolio of oil projects…
  30. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 30
    The principles of the business ? Grow oil production by investing in high quality oil resources ? Maintain operating & capital cost discipline by focusing on projects with strong returns & material net present value ? Manage…
  31. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 31
    Building value ? Top quality assets ? Foster Creek and Christina Lake are recognized as best in industry ? Significant growth opportunity ? potential for greater than 245,000 bbls/d (net) of production capacity at Foster Creek and…
  32. RBC Capital Markets Global Energy and Power Conference – 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. RBC Capital Markets Global Energy and Power Conference – 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. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 34
    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…
  35. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 35
    0 20 40 60 80 100 120 1-Apr-10 1-Jul-10 1-Oct-10 1-Jan-11 1-Apr-11 Operational excellence - Foster Creek Mbbls/d Volumes are shown on a 100% basis. Turnaround Record production 119.7 Mbbls/d Mar. 5, 2011
  36. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 36
    Christina Lake overview ? Pilot project began in 2000 ? First production in 2002 ? 18,000 bbls/d of production capacity (phases A & B) ? ~19 wells currently producing over 18,000 bbls/d ? Total planned capacity of ~258,000 bbls/d…
  37. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 37
    6 0 12 18 1-Apr-10 1-Jul-10 1-Oct-10 1-Jan-11 1-Apr-11 Operational excellence - Christina Lake Mbbls/d Volumes are shown on a 100% basis. Record production 20.3 Mbbls/d Mar. 12, 2011
  38. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 38
    ? Manufacturing process ? staged development ? dedicated in-house construction management teams ? multiple small contractors ? standard designs ? assembly line drilling & completions ? Module yard ? enhanced safety ? minimized…
  39. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 39
    Unlocking resource value 0 200 400 600 2008 2009 2010 2011 2012F 2013F 2014F Foster Creek Region Christina Lake Region Borealis Region Greater Pelican Region # strat wells ? Drilling about 450 gross strat wells per year for…
  40. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 40
    2017F Start up 2014F Construction 2013F Approval Q4 2012F FEED/procurement SAGD pilot; strat well program ? 38 gross wells drilled in Q1; submit application Q4 2011F Received regulatory approval for pilot project Began steaming…
  41. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 41
    Narrows Lake potential ? 50% WI ? 130 Mbbls/d (gross) production capacity ? 40 - 60 Mbbls/d expected first phase ? 2.1 SOR SAGD ? 1.6 SOR SAP ? 4 - 8 wells per section ? 12,960 net acres ? 0.5 Bbbls best estimate contingent…
  42. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 42
    Telephone Lake potential ? 100% WI ? 50 Mbbls/d production capacity ? 80 Mbbls/d expected first phase* ? 2.5 SOR ? 4 - 16 wells per section ? 36,480 net acres ? 0.7 Bbbls best estimate contingent resources** ? $65.00 ? 75.00/bbl…
  43. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 43
    18 16 14 12 10 0 2 4 6 8 Time Supply cost reduction ($US/bbl) Impact of technology development electric submersible pumps (ESP) liner improvements wedge wells blowdown boilers $10 - $12 reduction target history…
  44. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 44
    18 16 14 12 10 0 2 4 6 8 Time Supply cost reduction ($US/bbl) Impact of technology development electric submersible pumps (ESP) liner improvements wedge wells blowdown boilers $10 - $12 reduction target history…
  45. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 45
    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…
  46. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 46
    ? Ensure compliance ? Integrate environmental and business planning ? Demonstrate performance ? Incorporate innovations into projects and existing operations ? Communicate - engage Foster Creek well pad: 9 well pairs on one site of…
  47. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 47
    2011F conventional oil & natural gas Operating cash flow is a non-GAAP measure. See advisory. ALBERTA SASKATCHEWAN MANITOBA Wainwright Southern Alberta Shaunavon Bakken Weyburn ? Conventional oil & NGLs ? $520 ? 550 MM of…
  48. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 48
    0 200 400 600 800 2010 2011F 2012F 2013F 2014F 2015F Prior New MMcf/d Natural gas production Volumes are shown before royalties and net to CVE. 2011F based on commodity price assumptions as outlined in the April 27, 2011…
  49. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 49
    Lower Shaunavon ? 54 net sections ? 37 producing wells in Q1 ? ~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 20 25…
  50. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 50
    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) ? 11…
  51. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 51
    Weyburn ? 2011F activity ? commence rollout of 10 CO 2 patterns ? 40 wells (gross) including: ? 5 horizontal producers ? 22 CO 2 water alternating gas injection wells ? 11 vertical water injection wells ? 2 observation wells ?…
  52. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 52
    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.
  53. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 53
    Natural gas 0 250 500 750 1,000 2008 2009 2010 2011F MMcf/d ? Net before royalties ? 26,101 net producing wells (2010) ? 2011F activity ? drill 90 net wells ? recomplete 1,200 wells ? optimize production ? $130 - 150 MM…
  54. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 54
    0% 25% 50% 75% 100% 2011F 2012F Financially hedged Internal use Exposed to market Natural gas production Locking in cash flow stream Percent of production ? View natural gas as financial asset; not production asset ? ~75% of…
  55. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 55
    Managing financial risk ? Commodity price hedging ? Strong balance sheet metrics and capacity ? Integrated upstream and refining cash flows ? Economic hedge with natural gas internal consumption ? Other risk management practices ?…
  56. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 56
    Risks and mitigation ? Stakeholders ? continue to integrate stakeholder relations in our business ? Regulatory ? prepare additional project applications targeting 400 ? 500 Mbbls/d net in 2015 ? work with government to streamline…
  57. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 57
    Steepbank East McMurray Telephone Lake Grosmont Grand Rapids Foster Creek Proper Narrows Lake West Kirby Winefred Lake Christina Lake Proper Wabiskaw BOREALIS REGION GREATER PELICAN REGION CHRISTINA LAKE REGION FOSTER CREEK…
  58. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 58
    April 27, 2011 April 2011 update Foster Creek Christina Lake Total Total Production (Mbbls/d) 51 - 54 9 - 11 60 - 65 Operating cash flow ($ millions) (1) 700 - 800 100 - 125 800 - 925 Capital expenditures ($ millions) 350 - 400 350 -…
  59. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 59
    April 2011 update Oil & liquids Natural gas Total Total Production Oil & liquids (Mbbls/d) 45 - 50 45 - 50 Natural gas (MMcf/d) 630 - 670 630 - 670 Operating cash flow ($ millions) (1) 780 - 820 770 - 810 1,550 - 1,630 Capital…
  60. RBC Capital Markets Global Energy and Power Conference – Cenovus Energy Inc. – slide 60
    April 27, 2011 April 2011 update Total cash flow ($ billions) (1) 2.1 - 2.3 2.5 - 2.8 - per common share, diluted ($/share) 2.80 - 3.05 3.30 - 3.70 Operating cash flow ($ billions) (1) 2.7 - 3.0 3.2 - 3.6 Total capital expenditures…

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