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January 2015 Investor Presentation – Cenovus Energy Inc.

Cenovus Energy Inc. · Jan 26, 2015 · 43 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 2015 Investor Presentation – Cenovus Energy Inc. – slide 1
    A different kind of oil sands
  2. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 2
    A different kind of oil sands Focus on total shareholder return & building long-term value ? Top-tier oil sands portfolio generates predictable, reliable growth ? Strong project execution & innovation drives performance ? Strategic…
  3. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 3
    Strong integrated portfolio TSX, NYSE | CVE Enterprise value C$23 billion Shares outstanding 760 MM 2015F production Oil & NGLs Natural gas 206 Mbbls/d 438 MMcf/d 2013 proved & probable reserves 3.2 BBOE Bitumen Economic…
  4. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 4
    2012 2013 2014F 2015F 4 3 2 1 0 Advancing strategy; maintaining financial resilience in 2015 ? Focusing capital on highest return projects ? Foster Creek G, H and Christina Lake F, G ? Competitive supply costs of US$40-$45/bbl ?…
  5. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 5
    0 50 100 150 200 250 2009 2010 2011 2012 2013 2014F 2015F Oil sands Conventional oil & NGLs Mbbls/d Volumes are shown before royalties and net to Cenovus. 2014F and 2015F based on midpoints of guidance. Conventional oil includes…
  6. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 6
    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 2014F 2015F Foster Creek Christina Lake Oil sands…
  7. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 7
    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…
  8. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 8
    $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; Cenovus Energy. Thermal oil sands capital efficiencies
  9. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 9
    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…
  10. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 10
    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 Oct-14 Mbbls/d Christina…
  11. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 11
    Focusing on consistent operations 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 Oct-14 Mbbls/d Foster Creek daily…
  12. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 12
    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…
  13. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 13
    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…
  14. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 14
    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 83 wells…
  15. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 15
    SAGD portfolio provides development opportunity *Contingent resource figures represent best estimates as of year end 2013. See advisory. Foster Creek Christina Lake Narrows Lake Grand Rapids Telephone Lake Working interest 50% 50% 50%…
  16. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 16
    Engineering & procurement ? Standard, repeatable design ? Outsource detailed engineering ? Standard equipment & services Fabrication ? Cenovus-owned & operated module yard (Nisku) ? Eliminates field rework & enhances safety…
  17. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 17
    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 &…
  18. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 18
    Progressing engineering and procurement at Narrows Lake Narrows Lake commercial project: ? First commercial SAGD project to incorporate solvent aided process (SAP) ? Evaluating development options to leverage existing infrastructure…
  19. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 19
    Continuing early stage development at Telephone Lake Borealis region Telephone Lake project area Steepbank & East McMurray Saskatchewan Alberta Telephone Lake commercial project: ? Regulatory approval received in 2014 ?…
  20. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 20
    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 ? Third well pair planned for Q1 2015 Commercial…
  21. January 2015 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. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 22
    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: ?…
  23. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 23
    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 ? 83 currently producing ? Christina…
  24. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 24
    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…
  25. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 25
    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…
  26. January 2015 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. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 27
    Conventional assets and non-core dispositions help fund oil sands growth $ billion Conventional oil & gas: ? ~70% fee lands ? Payback less than three years ? Scalable & flexible capital program ? Diversification of product streams…
  28. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 28
    Fee lands provide a strategic advantage Fee lands generate free cash flow: ? 3.1 MM net acres (~90% fee) ? Mineral rights owned in perpetuity ? No royalties payable to the Crown ? Q3 YTD royalty interest volumes of ~7,700 BOE/d…
  29. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 29
    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
  30. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 30
    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…
  31. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 31
    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:…
  32. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 32
    Rail transportation plans ? Long-term plan to ship 10-20% of corporate volumes by rail ? Began receiving first of 825 coiled & insulated rail cars in Q4 2014 ? Secured 30,000 bbls/d loading capacity between: ? USDG/Gibsons terminal…
  33. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 33
    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…
  34. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 34
    Maintaining financial strength and flexibility to support the business plan ? Ensure significant liquidity & long dated debt maturities ? US$4.75 billion in notes with no maturities until 2019 ? Weighted average interest rate ? 5.3%…
  35. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 35
    Crude unhedged 51% Natural gas unhedged(1) 11% Refining 16% Crude hedged 22% (1) 209 MMcf/d of internal use & long-term fixed price sales. (2) C$ hedges converted to US Dollar at 1.1208 C$/US$; crude hedged at Brent price (3)…
  36. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 36
    Committed to long-term dividend growth Dividend growth requires: ? Strong financial health ? Sustainable pace of development ? Reliable, predictable cash flow to support payments ? Ongoing capital discipline $/share 0.00 0.20…
  37. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 37
    Creating value through social and governance performance Committed to good governance ? SER Committee of the Board provides oversight of environment and sustainability performance ? Enterprise Risk Management program, practices and…
  38. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 38
    Advancing our environmental performance ? Rigorous regulatory framework ensures environment considerations throughout project lifecycle ? Dedicated internal environment team focused on mitigating environmental risks ? Ongoing…
  39. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 39
    Steepbank East McMurray Telephone Lake Grosmont Grand Rapids Foster Creek Proper Narrows Lake West Kirby Winefred Lake Christina Lake Proper Wabiskaw BOREALIS REGION GREATER PELICAN REGION CHRISTINA LAKE REGION FOSTER CREEK…
  40. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 40
    October 23, 2014 Foster Creek Christina Lake Narrows Lake Total Q4 2014 2014 Q4 2014 2014 Q4 2014 2014 Q4 2014 2014 Production (Mbbls/d) 60 57 67 67 127 124 Operating cash flow ($ millions) (1) 260 - 280 990 - 1,010 240 - 260 1,050 -…
  41. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 41
    Q4 2014 2014 Oil Production (Mbbls/d) 200 198 Natural gas production (MMcf/d) 470 485 Total cash flow ($ billions) (1) 0.7 - 0.8 3.8 - 3.9 - per common share, diluted ($/share) 0.90 - 1.05 5.00 - 5.15 Operating cash flow ($ billions)…
  42. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 42
    December 11, 2014 Steam to oil rates (%) ratio Foster Creek 62 - 68 700 - 750 Fuel 3.50 - 4.00 6 - 7 2.6 - 3.0 Non-fuel 12.00 - 14.00 Total 15.50 - 18.00 Christina Lake 67 - 74 800 - 860 Fuel 3.25 - 3.75 5 - 6 1.8 - 2.1 Non-fuel…
  43. January 2015 Investor Presentation – Cenovus Energy Inc. – slide 43
    225 - 245 7.50 - 8.50 2.6 - 2.9 Upstream DD&A ($ billions) 1.5 - 1.7 3.40 - 3.80 Other DD&A ($ millions) (6) 255 - 290 2.5 - 2.7 Cash tax ($ millions) 345 - 395 390 - 445 Effective tax rate (%) (7) 25 - 29 Brent (US$/bbl) Independent…

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