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BAML Global Energy Conference – Cenovus Energy Inc.

Cenovus Energy Inc. · Nov 12, 2012 · 41 slides

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Slides

  1. BAML Global Energy Conference – Cenovus Energy Inc. – slide 1
    Bank of America Merrill Lynch Global Energy Conference Brian Ferguson, President & Chief Executive Officer November 13, 2012 | Miami, FLorida
  2. BAML Global Energy Conference – Cenovus Energy Inc. – slide 2
    A different kind of oil sands ? Top-tier oil sands portfolio generates predictable, reliable growth ? Strong project execution & innovation drives performance ? Strategic integration & market access enhances cash flow ? Solid &…
  3. BAML Global Energy Conference – Cenovus Energy Inc. – slide 3
    Strong integrated oil portfolio Values are approximate. Forecast production based on guidance dated October 25, 2012. Cenovus land and bitumen estimates at December 31, 2011 have been updated to reflect the divestiture of the Boyer…
  4. BAML Global Energy Conference – Cenovus Energy Inc. – slide 4
    ? 33% growth in total liquids production ? 76% growth in SAGD production ? 1% growth in conventional liquids production (including Pelican Lake) ? 34% total shareholder return ? $1.9 billion in dividends paid ? 32% increase in…
  5. BAML Global Energy Conference – Cenovus Energy Inc. – slide 5
    0 25 50 75 100 125 150 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F Foster Creek Christina Lake Mbbls/d 5 yr CAGR (2008?2012F) ~27% Production is shown before royalties and on a gross basis.…
  6. BAML Global Energy Conference – Cenovus Energy Inc. – slide 6
    Executing on our commitments Represents expected timelines; see advisory. concluded 2012 milestones Q1 Grow reserves & contingent resources Drill 400 to 500 stratigraphic test wells and assess results Q2 Connect Bakken central…
  7. BAML Global Energy Conference – Cenovus Energy Inc. – slide 7
    0 100 200 300 400 500 2010 2011 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. 2012F based on guidance dated October…
  8. BAML Global Energy Conference – Cenovus Energy Inc. – slide 8
    ? Top quality reservoirs ? Manufacturing approach & project execution ? Operational excellence ? Experienced team ? Technological innovations ? Stakeholder relationships & environmental track record Identifying our keys to success
  9. BAML Global Energy Conference – Cenovus Energy Inc. – slide 9
    8 6 4 2 0 CVE FC CVE CL ? Lower capital cost ? Lower operating cost ? Smaller surface footprint ? Lower energy usage ? Lower emissions ? Less water usage Low SOR means Cost advantage driven by reservoir quality Peers include:…
  10. BAML Global Energy Conference – Cenovus Energy Inc. – slide 10
    Maintaining leading capital efficiencies Foster Creek $/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…
  11. BAML Global Energy Conference – Cenovus Energy Inc. – slide 11
    ? 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…
  12. BAML Global Energy Conference – Cenovus Energy Inc. – slide 12
    Consistent & reliable operating performance Turnaround Mbbls/d Production is shown on a gross basis. Foster Creek daily production Capacity
  13. BAML Global Energy Conference – Cenovus Energy Inc. – slide 13
    Christina Lake phases A-C & startup of D Production is shown on a gross basis. Improving start-up accelerates cash flow Capacity Mbbls/d
  14. BAML Global Energy Conference – Cenovus Energy Inc. – slide 14
    Focus on innovation 2004 2006 2008 2010 2012 2014 2016 ESP (phase 2) New drilling met hod Combust ion (AIDROH) Conf ident ial project Conf ident ial project Conf ident ial project Warm Lime Sof t ening Conf ident ial project…
  15. BAML Global Energy Conference – Cenovus Energy Inc. – slide 15
    Growing our conventional oil assets Cenovus land at December 31, 2011.* *Updated to reflect the divestiture of the Boyer natural gas property in northern Alberta. 2012 objectives: ? Growing liquids production by 12% ? Expanding…
  16. BAML Global Energy Conference – Cenovus Energy Inc. – slide 16
    Refining assets enhance financial performance ? Wood River ? 306 Mbbls/d crude capacity ? 200 - 220 Mbbls/d heavy crude ? 85% clean product yield ? Borger ? 146 Mbbls/d crude capacity ? 35 Mbbls/d heavy crude ? 89% clean product…
  17. BAML Global Energy Conference – Cenovus Energy Inc. – slide 17
    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% 6% 7% COS HSE SU CNQ IMO Full year 2011…
  18. BAML Global Energy Conference – Cenovus Energy Inc. – slide 18
    Cenovus?s value pledge ? Deliver on commitments ? Build on our strong track record ? Double net asset value between 2010 and 2015 ? Sustain decades of growth with manufacturing model Focused on increasing total shareholder return…
  19. BAML Global Energy Conference – Cenovus Energy Inc. – slide 19
    Delivering on our commitments 2011 milestones Q1 Added significant reserves & contingent resources Executed strat well program: 440 wells Q2 Sanctioned Foster Creek F, G & H Received results from 2011 strat well & seismic programs…
  20. BAML Global Energy Conference – Cenovus Energy Inc. – slide 20
    Building NAV by converting resources Discovered BIIP 56 Bbbls Undiscovered BIIP 82 Bbbls 1P 2P 2C 8.2 Bbbls See advisory. Volumes are best estimate, shown before royalties and on a net basis.
  21. BAML Global Energy Conference – Cenovus Energy Inc. – slide 21
    Advancing oil sands projects Project phase Regulatory status First production target Expected production capacity (bbls/d) gross Foster Creek1 A ? E 120,000 F Approved2 2014F 45,000 G Approved 2015F 40,000 H Approved 2016F 40,000 J…
  22. BAML Global Energy Conference – Cenovus Energy Inc. – slide 22
    0 100 200 300 400 500 2010 2011 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 shown…
  23. BAML Global Energy Conference – Cenovus Energy Inc. – slide 23
    ? Reservoir quality, thickness and homogeneity is comparable to Foster Creek and Christina Lake ? 2.1 billion bbls of bitumen contingent resources (December 31, 2011) ? 95 strat wells drilled (2008-2012) ? EIA and joint…
  24. BAML Global Energy Conference – Cenovus Energy Inc. – slide 24
    Oil sands project comparison Foster Creek Christina Lake Narrows Lake Grand Rapids Telephone Lake Working interest 50% 50% 50% 100% 100% Potential size (Mbbls/d gross) 310 300 130 180 >300* Design SOR 2.1 1.7 2.1 SAGD 1.6 SAP…
  25. BAML Global Energy Conference – Cenovus Energy Inc. – slide 25
    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…
  26. BAML Global Energy Conference – Cenovus Energy Inc. – slide 26
    Cenovus?s Solvent A ? 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 bitumen ? 10 ? 20%…
  27. BAML Global Energy Conference – Cenovus Energy Inc. – slide 27
    Telephone Lake ? dewatering pilot ? Dewatering involves removing the top water from the reservoir ? Dewatering expected to improve project economics, but is not required for development ? Dewatering benefits ? reduce SOR ?…
  28. BAML Global Energy Conference – Cenovus Energy Inc. – slide 28
    Volumes are shown before royalties. 2012F based on guidance dated October 25, 2012. 2013F through 2020F based on future price assumptions as noted in the advisory. 0 20 40 60 80 100 1998 2000 2002 2004 2006 2008 2010 2012 2014…
  29. BAML Global Energy Conference – Cenovus Energy Inc. – slide 29
    Advancing tight oil opportunities Lower Shaunavon ? 42 wells ? 54 net sections ? 118 producing wells ? ~4,550 bbls/d (Q3 2012 average) ? ~5 - 10% recovery factor ? 20 - 25? API medium oil Bakken ? 4 wells ? 140+ undeveloped…
  30. BAML Global Energy Conference – Cenovus Energy Inc. – slide 30
    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…
  31. BAML Global Energy Conference – Cenovus Energy Inc. – slide 31
    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 ?…
  32. BAML Global Energy Conference – Cenovus Energy Inc. – slide 32
    0 20 40 60 80 100 2011 AVG 2012 SEP YTD Gasoline Distillate Other % Refined products* Increasing heavy oil processing & clean product yield 0 20 40 60 80 100 2011 AVG 2012 SEP YTD Heavy Medium sour Light % Crude*…
  33. BAML Global Energy Conference – Cenovus Energy Inc. – slide 33
    Operational Heavy oil production integrated with refining capacity Scalable conventional oil programs provide flexibility Portfolio approach to transportation requirements Financial Financial strength to support growth plans Natural…
  34. BAML Global Energy Conference – Cenovus Energy Inc. – slide 34
    Building flexibility into capital programs 2012F based on commodity price assumptions outlined in the October 25, 2012 guidance document. 2013F through 2021F based on future price assumptions as noted in the advisory. *Non-GAAP…
  35. BAML Global Energy Conference – Cenovus Energy Inc. – slide 35
    CVE wide 6% Refining 4% Pelican Lake 16% New resource plays 11% Christina Lake 17% Foster Creek 21% Conventional oil 23% Natural gas 2% Capital investment focused on oil growth 2012 capital budget: $3.3 - $3.4 B ?…
  36. BAML Global Energy Conference – Cenovus Energy Inc. – slide 36
    Managing commodity price risk 1P 2P 2C 8.2 Bbbls Unhedged* 116 Mbbls/d WTI NYMEX Fixed (70%) US$98.27/bbl 49 Mbbls/d (30%) 2012 Oil hedge positions 2012 Natural gas hedge positions Hedge positions at September 30, 2012.…
  37. BAML Global Energy Conference – Cenovus Energy Inc. – slide 37
    Key credit metrics & ratings Credit metrics Q3 2012 Q3 2011 Target Range Debt to capitalization* 31% 28% 30 ? 40% Debt to adjusted EBITDA* 1.1x 1.1x 1.0 ? 2.0x Total debt $4,626 $3,617 *Non-GAAP measures. See advisory. Credit…
  38. BAML Global Energy Conference – Cenovus Energy Inc. – slide 38
    Q4 2012 2012 Foster Creek Production (Mbbls/d) 60 58 Operating cash flow ($ millions) (1) 285 - 315 965 - 995 Capital expenditures ($ millions) 185 - 205 710 - 730 Operating costs ($/bbl) Fuel 2.55 2.05 Non-fuel 8.85 10.00 11.40…
  39. BAML Global Energy Conference – Cenovus Energy Inc. – slide 39
    Q4 2012 2012 Oil & liquids Production (Mbbls/d) 54 53 Operating cash flow ($ millions) (1) 260 - 290 980 - 1,010 Capital expenditures ($ millions) 220 - 240 770 - 790 Operating costs ($/bbl) 15.25 15.60 Effective royalty rates (%)…
  40. BAML Global Energy Conference – Cenovus Energy Inc. – slide 40
    Q4 2012 2012 Total cash flow ($ billions) (1) 1.0 - 1.2 3.9 - 4.1 - per common share, diluted ($/share) 1.30 - 1.56 5.18 - 5.44 Operating cash flow ($ billions) (1) 1.2 - 1.4 4.7 - 4.9 Total capital expenditures ($ billions) (5) 0.9 -…
  41. BAML Global Energy Conference – Cenovus Energy Inc. – slide 41
    ^ 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…

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