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September 2015 Investor Presentation – Cenovus Energy Inc.

Cenovus Energy Inc. · Sep 2, 2015 · 45 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. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 1
    A different kind of oil sands
  2. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 2
    Strong integrated portfolio TSX, NYSE | CVE Enterprise value C$20 billion Shares outstanding 833 million 2015F production Oil & NGLs Natural gas 204 Mbbls/d 438 MMcf/d 2014 proved & probable reserves 3.9 BBOE Bitumen Economic…
  3. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 3
    Delivering value in a volatile market ? Continuing to focus on financial strength ? Implementing sustainable reductions in our cost structure ? Returns-focused organic capital allocation to oil sands ? Continuing to optimize the…
  4. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 4
    0% 10% 20% 30% 40% 50% CVE Peer 1 CVE revised Peer 2 Peer 3 Peer 4 Peer 5 2016E dividend payout ratio Continued focus on financial strength ? Strong balance sheet ? Heritage Royalty Limited Partnership (HRP) sale generated…
  5. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 5
    Returns-focused organic capital allocation FCCL growth Emerging plays Capital allocation priorities Conventional Assuming WTI prices ~$65/bbl through 2017. Oil sands & downstream sustaining capital Dividend (20% - 25% of cash…
  6. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 6
    - 100 200 300 400 500 Opex Capital G&A June YTD Opex Capital G&A *Additional workforce cuts 2016E Original target: $200 million Additional 2016 opportunities ? Additional staff reductions ? Further reduction in costs ? zero…
  7. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 7
    Established base of high quality resource Undiscovered BIIP 50 Bbbls Discovered BIIP 93 Bbbls 2.4 Bbbls 1.5 Bbbls Contingent 9.3 Bbbls Proved See advisory for information on resource estimates. There is no certainty that it will…
  8. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 8
    SAGD portfolio provides development opportunity & growth potential 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…
  9. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 9
    0 50 100 150 200 250 2009 2010 2011 2012 2013 2014 2015F Oil sands Conventional oil & NGLs Mbbls/d Volumes are shown before royalties and net to Cenovus. 2015F based on midpoints of guidance. Conventional oil includes Pelican…
  10. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 10
    Our manufacturing approach has driven oil sands growth 0 50 100 150 200 250 300 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F Foster Creek Christina Lake Oil sands…
  11. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 11
    Advancing oil sands projects 1 Properties 50% owned by ConocoPhillips. Certain phases may be subject to partner approval. 2 Total production capacity indicates projected potential for each project. 3 Each of phases F, G and H are…
  12. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 12
    $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 C$/bbl/d Proven track record in project development Source: FirstEnergy at February 2015; Cenovus Energy. Thermal oil sands capital efficiencies
  13. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 13
    5 0 10 15 20 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Foster Creek Christina Lake Industry average $/bbl Foster Creek Q2 operating costs down 30% year-over-year Christina Lake Q2 operating costs down 31% year-over-year Source:…
  14. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 14
    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 CL TL NL ? Lower capital cost ? Lower operating cost ? Smaller surface footprint ? Lower energy usage ? Lower emissions ? Less water…
  15. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 15
    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: ?…
  16. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 16
    Lowering SOR with the post steam recovery phase SAGD pad 1 SAGD pad 2 Oil production CSOR Time Steam is reallocated to a new pad Incremental oil
  17. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 17
    Demonstrating top tier reservoir performance 0 20 40 60 80 100 120 140 160 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 Oct-14 Jan-15 Apr-15…
  18. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 18
    Focusing on consistent operations 0 20 40 60 80 100 120 140 160 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 Oct-14 Jan-15 Apr-15 Jul-15…
  19. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 19
    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…
  20. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 20
    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…
  21. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 21
    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 ? currently 89 wells…
  22. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 22
    Engineering & procurement ? Standard, repeatable design ? Outsource detailed engineering ? Standard equipment & services Fabrication ? Cenovus-owned & operated module yard (Nisku) ? Eliminates field rework & enhances safety…
  23. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 23
    Committed to maintaining low capital cost structure Capital Target total capital ~$11 - $14/bbl full cycle $2 - $3/bbl Growth capital: ? Phase expansion (includes all infrastructure & initial wells) ? Phase debottlenecking &…
  24. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 24
    Progressing engineering at Narrows Lake Narrows Lake commercial project: ? First commercial SAGD project to incorporate solvent aided process (SAP) ? Evaluating development options to leverage existing infrastructure at nearby…
  25. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 25
    Assessing development options at Telephone Lake Borealis region Telephone Lake project area Steepbank & East McMurray Saskatchewan Alberta Telephone Lake commercial project: ? Regulatory approval received in 2014 ? Continuing…
  26. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 26
    Continuing to evaluate Grand Rapids Grand Rapids Pilot location Central plant facility site SAGD pilot update: ? Operating since 2010 ? Two well pairs currently producing ? Third pilot well pair completed Q1 2015; steam…
  27. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 27
    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 ?…
  28. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 28
    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 ? 89 currently producing ? Christina…
  29. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 29
    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…
  30. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 30
    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…
  31. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 31
    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…
  32. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 32
    Continuing to optimize the portfolio $ billion Conventional oil & natural gas ? Focusing a modest amount of incremental capital in SE Alberta and Weyburn ($70 MM) ? No plans for spending at Pelican Lake and Suffield ? Scalable and…
  33. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 33
    5 0 10 15 20 25 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Cenovus Industry average $/bbl Conventional oil Q2 operating costs down 18% year-over-year Source: Public company disclosure. Implementing sustainable reductions in…
  34. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 34
    Expanding margin through market access & integration Production Alberta pricing Transportation North American & global crude pricing Refining Global product pricing Participating in the value chain to expand margin
  35. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 35
    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…
  36. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 36
    Committing to pipeline expansions for market access Current pipeline access: ? West Coast: Trans Mountain ? 11,500 bbls/d ? US Gulf Coast: Enbridge USGC/Flanagan South ? 75,000 bbls/d Adding pipeline commitments: ? US Gulf Coast:…
  37. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 37
    Rail transportation plans ? Long-term plan to ship 10-20% of corporate volumes by rail ? Taken delivery of 825 coiled & insulated rail cars ? Secured significant loading capacity between: ? USDG/Gibsons terminal (Hardisty) ?…
  38. September 2015 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. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 39
    Maintaining financial strength & flexibility to support the business plan ? Ensure significant liquidity & long-term debt maturities ? $3.0 billion committed credit facility maturing November 30, 2019 ? $1.0 billion committed credit…
  40. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 40
    (1) Internal use 180 MMcf, long- term fixed price sale 29 MMcf. 2015F production based on July 30, 2015 guidance. Hedges at June 30, 2015 Volume hedged Hedge price Production 2015F Volume % hedged Crude ? Brent Fixed Price, 2015…
  41. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 41
    Creating value through social & governance performance Committed to good governance ? SER Committee of the Board provides oversight of environment and sustainability performance ? Enterprise Risk Management program, practices and…
  42. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 42
    Advancing our environmental performance ? Rigorous regulatory framework ensures environment considerations throughout project lifecycle ? Dedicated internal environment team focused on mitigating environmental risks ? Ongoing…
  43. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 43
    ^ Steepbank East McMurray Telephone Lake Grosmont Grand Rapids Foster Creek Proper Narrows Lake West Kirby Winefred Lake Christina Lake Proper Wabiskaw BOREALIS REGION GREATER PELICAN REGION CHRISTINA LAKE REGION FOSTER…
  44. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 44
    July 30, 2015 Steam to oil rates (%) ratio Foster Creek 62 - 68 475 - 525 Fuel 2.75 - 3.25 3 - 5 2.6 - 3.0 Non-fuel 10.75 - 11.75 Total 13.50 - 15.00 Christina Lake 67 - 74 675 - 725 Fuel 2.25 - 2.75 2 - 4 1.8 - 2.1 Non-fuel 6.25 -…
  45. September 2015 Investor Presentation – Cenovus Energy Inc. – slide 45
    2.1 - 2.3 Upstream DD&A ($ billions) 1.5 - 1.7 2.60 - 2.80 Other DD&A ($ millions) (6) 255 - 290 1.8 - 2.0 Cash tax ($ millions) (7) 300 - 350 325 - 375 Effective tax rate (%) (8) 27 - 32 Brent (US$/bbl) Independent base case…

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