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May 2016 Presentation – Cenovus Energy Inc.

Cenovus Energy Inc. · May 16, 2016 · 35 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. May 2016 Presentation – Cenovus Energy Inc. – slide 1
  2. May 2016 Presentation – Cenovus Energy Inc. – slide 2
    About Cenovus Oil sands Oil sands drilling projects in northern Alberta Refineries 50 percent ownership in two U.S. refineries Conventional assets Established conventional oil and natural gas assets in Alberta and Saskatchewan…
  3. May 2016 Presentation – Cenovus Energy Inc. – slide 3
    2016 priorities ? Maintain financial strength and capital discipline ? Demonstrate sustainable cost reductions ? Operational excellence ? improvements in base operations ? steward further improvements in environmental performance ?…
  4. May 2016 Presentation – Cenovus Energy Inc. – slide 4
    Capital allocation strategy focused on value creation Conventional Maintain balance sheet strength Investment grade credit metrics Reinvest in high return organic growth opportunities 3 FC, CL and NL Southern Alberta light oil…
  5. May 2016 Presentation – Cenovus Energy Inc. – slide 5
    0% 10% 20% 30% 40% 50% 60% - 2 4 6 8 10 12 14 Net debt to capitalization ratio* Total liquidity ($ billions) Liquidity position supports financial resiliency *Non-GAAP measure. See advisory. Total liquidity reflects unused…
  6. May 2016 Presentation – Cenovus Energy Inc. – slide 6
    0 500 1,000 1,500 2019 2022 2023 2039 2042 2043 US$ millions Debt maturity profile *Non-GAAP measure. See advisory. Net debt calculated as total debt less cash and cash equivalents. Credit ratings and outlooks at April 22, 2016.…
  7. May 2016 Presentation – Cenovus Energy Inc. – slide 7
    Becoming a low cost energy producer Targeting 30% reduction from 2014 levels ? 26% reduction to G&A ? Improved efficiencies, workforce optimization and discretionary spending ? 25% reduction to oil sands opex ? Sustainable cost…
  8. May 2016 Presentation – Cenovus Energy Inc. – slide 8
    ? Design philosophy that uses a zero-base* approach to well pair and pad designs ? Materially reduces costs while maintaining safety, compliance and production ? 40% - 60% material reduction ? 15% - 20% well pad surface footprint…
  9. May 2016 Presentation – Cenovus Energy Inc. – slide 9
    $7.0 $9.4 5.0 6.0 7.0 8.0 9.0 10.0 2014 basis Drilling Completions Pipelines Well pads Earthworks Tie-in Future basis Targeted SAGD well cost reductions* $ million/well pair Examples ? Demonstrated a 30% reduction in the…
  10. May 2016 Presentation – Cenovus Energy Inc. – slide 10
    Improving sustainability 9 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 2014 2015 2016F C$ billions Growth capital Dividend Sustaining capital WTI breakeven US$65 ? $75/bbl WTI breakeven US$55 ? $60/bbl WTI breakeven US$45 ? $50/bbl…
  11. May 2016 Presentation – Cenovus Energy Inc. – slide 11
    0 50 100 150 200 250 300 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F Foster Creek Christina Lake Oil sands production Mbbls/d Production is shown before…
  12. May 2016 Presentation – Cenovus Energy Inc. – slide 12
    0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 GR FC TL CL NL ? Lower capital cost ? Lower operating cost ? Smaller surface footprint ? Lower energy usage ? Lower emissions ? Less water usage Steam to oil ratio bbl/bbl Low…
  13. May 2016 Presentation – Cenovus Energy Inc. – slide 13
    12 Leading environmental performance ? Cenovus?s direct oil sands GHG emissions intensity are: ? 45% below industry average* ? down 33% since 2004 ? Outcome of top quartile SOR performance and technology such as: ? Wedge Well?…
  14. May 2016 Presentation – Cenovus Energy Inc. – slide 14
    Source: IHS. Peer projects include: Algar, Christina Lake, Cold Lake, Firebag, Hangingstone, Jackfish, Kirby South, Leismer, Long Lake, MacKay, Orion, Paradise Hill, Peace River, Pikes Peak South, Pod 1, Primrose Wolf Lake, Rush Lake,…
  15. May 2016 Presentation – Cenovus Energy Inc. – slide 15
    Mbbls/d 0 20 40 60 80 100 120 140 160 180 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 production capacity Christina Lake daily…
  16. May 2016 Presentation – Cenovus Energy Inc. – slide 16
    0 20 40 60 80 100 120 140 160 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 Mbbls/d Foster Creek daily production Production is shown before…
  17. May 2016 Presentation – Cenovus Energy Inc. – slide 17
    8 7 6 5 4 3 2 1 0 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 SOR Oil production (boe/d) Foster Creek mature east…
  18. May 2016 Presentation – Cenovus Energy Inc. – slide 18
    Poor conformance Improved conformance Illustrative SAGD production profile Wells using Wedge Well? technology drilled to reduce impact of poor conformance Improving conformance should reduce need for Wedge Well? technology…
  19. May 2016 Presentation – Cenovus Energy Inc. – slide 19
    0% 2% 4% 6% 8% 10% 0 50 100 150 200 250 300 350 Days on production W08(2015) (2008) E20 ? Despite the E20 (2008) pad having superior quality, improving conformance on new pads of lesser quality such as the W08 (2015) pad, has…
  20. May 2016 Presentation – Cenovus Energy Inc. – slide 20
    $ billion Conventional assets Conventional oil and natural gas ? 2016F production of approximately 120,000 BOE/d ? Provided over $5.0 billion of free cash flow since 2010 ? Portfolio includes both free cash flow and growth assets ?…
  21. May 2016 Presentation – Cenovus Energy Inc. – slide 21
    20 Southern Alberta light oil Large inventory of multi zone light oil locations on Southern Alberta lands ? Over 1,200 sections of leased and available Mannville oil lands ? 10-year option exclusive to Cenovus ? attractive lease…
  22. May 2016 Presentation – Cenovus Energy Inc. – slide 22
    ? Refineries have access to discounted crudes ? Wood River accesses multiple pipelines ? Keystone, Express-Platte, Mustang, Ozark ? Borger has access to Canadian heavy, West Texas Sour and growing Permian supply ? Wood River…
  23. May 2016 Presentation – Cenovus Energy Inc. – slide 23
    22 Mitigating heavy oil differentials 0 50 100 150 200 250 300 2013 2014 2015 2016F Integrated volumes: - heavy oil processing Managed price exposure: - hedging contracts (financial and physical) Mbbls/d % of blended heavy…
  24. May 2016 Presentation – Cenovus Energy Inc. – slide 24
    Current pipeline access ? West Coast: Trans Mountain ? 11,500 bbls/d ? US Gulf Coast: Enbridge USGC/Flanagan South 75,000 bbls/d Potential pipeline commitments ? US Gulf Coast: TCPL Keystone XL ? 75,000 bbls/d ? East Coast: TCPL…
  25. May 2016 Presentation – Cenovus Energy Inc. – slide 25
    ? Long-term optionality to ship 10% ? 20% of corporate volumes by rail ? Taken delivery of 825 coiled and insulated rail cars ? Secured 70,000 bbls/d of loading capacity between: ? Bruderheim Energy terminal (Edmonton) ? acquired…
  26. May 2016 Presentation – Cenovus Energy Inc. – slide 26
    2015 Q1 Q2 Q3 2016 Q1 Capex $700MM reduction Balance sheet $1.5B equity issue Workforce reduction of 800 Operating costs decline 23% YoY Heritage Limited Royalty Partnership sale for $3.3B Workforce reduction of 700 Dividend…
  27. May 2016 Presentation – Cenovus Energy Inc. – slide 27
    Capital Total capital ~$11 - $14/bbl full cycle $2 - $3/bbl Growth capital ? Phase expansion (includes all infrastructure and initial wells) ? Phase debottlenecking and optimization ? Numerator for capital efficiency calculation $9…
  28. May 2016 Presentation – Cenovus Energy Inc. – slide 28
    SAGD portfolio provides development opportunity and growth potential Totals may not add due to rounding. For additional information about our economic contingent resources please see the advisory. There is uncertainty that it will be…
  29. May 2016 Presentation – Cenovus Energy Inc. – slide 29
    SAP at Narrows Lake Narrows Lake project area Christina Lake core Christina Lake region Narrows Lake commercial project SAP ? First commercial SAGD project to incorporate solvent aided process (SAP) ? Evaluating development…
  30. May 2016 Presentation – Cenovus Energy Inc. – slide 30
    Telephone Lake commercial project ? Regulatory approval received in 2014 ? Continuing engineering work; assessing development options ? Estimated project SOR ? 2.1 ? Expected initial production capacity 90,000 bbls/d (phases A & B) ?…
  31. May 2016 Presentation – Cenovus Energy Inc. – slide 31
    Creating value through social and governance performance Committed to good governance ? SER Committee of the Board provides oversight of environment and sustainability performance ? Enterprise Risk Management program, practices and…
  32. May 2016 Presentation – Cenovus Energy Inc. – slide 32
    Advancing our environmental performance ? Rigorous regulatory framework ensures environment considerations throughout project lifecycle ? Dedicated internal environment team focused on mitigating environmental risks ? Ongoing…
  33. May 2016 Presentation – Cenovus Energy Inc. – slide 33
    32 Mitigating financial risk Hedge contracts as at April 22, 2016 Hedge position Hedge price Volume % hedged(2) and average price 2016 Crude ? Brent Fixed Price January ? June January ? June January ? December July - December…
  34. May 2016 Presentation – Cenovus Energy Inc. – slide 34
    Refining operating cash flow sensitivities -250 0 250 500 750 1,000 1,250 10.00 15.00 20.00 Chicago crack spread - US$/bbl US$20/bbl US$15/bbl US$10/bbl Refining operating cash flow net (LIFO basis) US$ million L/H diff…
  35. May 2016 Presentation – Cenovus Energy Inc. – slide 35
    Illustrative SAGD netbacks 34 Heavy differential Quality differential Cost of condensate Royalties Transportation Operating costs Netbacks* Heavy differential Quality differential Cost of condensate Royalties Transportation…

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