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November 2016 Investor Presentation – Encana Corp

Encana Corp · Nov 2, 2016 · 44 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. November 2016 Investor Presentation – Encana Corp – slide 1
  2. November 2016 Investor Presentation – Encana Corp – slide 2
    3 - 1,000 2,000 3,000 4,000 2016F 2017F 2018F 2019F 2020F 2021F 5 YEAR CAPITAL & CASH FLOW OUTLOOK Self-Funding Capital Program Post 2017 ? Projected >300% cash flowT* growth ? Focus on high margin production amplifies cash…
  3. November 2016 Investor Presentation – Encana Corp – slide 3
    4 250 350 450 550 650 2016F 2017F 2018F 2019F 2020F 2021F PRODUCTION GROWTH TRAJECTORY ? >60% total company production* growth ? Permian grows ~3x ? 4x ? Montney liquids grow ~4x ? 5x, gas grows ~2x ? Combination of Eagle Ford…
  4. November 2016 Investor Presentation – Encana Corp – slide 4
    5 Projected 2017 Program ? $1.4 - $1.8 B total capital ? Permian: $850MM to $1.0B ? Montney: $200 to $300MM ? EF + Duvernay: $300 to $450MM ? >90% of capital to DC&T ? Growth in core four begins mid-year ? 15-20% core four…
  5. November 2016 Investor Presentation – Encana Corp – slide 5
    7 36% 30% 28% 23% 0% 10% 20% 30% 40% 50% 60% 70% 80% YE 2013 YE 2014 YE 2015 Q3 2016 ? $4.5B fully committed, unsecured, revolving credit facilities ? $4.5B available at September 30, 2016 ? Committed to July 2020 ? No…
  6. November 2016 Investor Presentation – Encana Corp – slide 6
    8 DISCIPLINED FINANCIAL MANAGEMENT Debt Portfolio as at September 30, 2016 0 250 500 750 1,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036…
  7. November 2016 Investor Presentation – Encana Corp – slide 7
    9 REDUCING LONG TERM T&P COMMITMENTS Legacy Costs Continue to Drop $0 $200 $400 $600 $800 $1,000 $1,200 2014 2015 2016F 2017F 2018F 2019F 2020F 2021F Non-core Core $MM Transportation & Processing Commitments* *Represents…
  8. November 2016 Investor Presentation – Encana Corp – slide 8
    10 HEDGING PROGRAM Adds Greater Certainty to Cash Flow NYMEX Fixed Price Swap 0.00 0.25 0.50 0.75 1.00 1.25 1.50 2016* 2017 Volume (Bcf/d) Natural Gas Positions NYMEX 3-Way Option 0 25 50 75 100 2016* 2017 Volume…
  9. November 2016 Investor Presentation – Encana Corp – slide 9
    11 LIQUIDS VALUE CHAIN Projected Composition of Total Liquids Production *2016F based on company guidance as at November 3, 2016; production ranges are not additive; **Includes plant condensate Liquids primarily comprised of…
  10. November 2016 Investor Presentation – Encana Corp – slide 10
    13 STRONG FINANCIAL & OPERATIONAL PERFORMANCE Q3 Highlights Q2 2016 Q3 2016 Upstream Operating Cash FlowT* Excluding Hedging ($MM) 204 319 Upstream Operating Cash Flow* Including Hedging ($MM) 330 374 Transportation & Processing…
  11. November 2016 Investor Presentation – Encana Corp – slide 11
    15 ? Core positions in four of North America?s premier basins ? Over 20,000 total inventory locations across core four assets ? ~10,000 premium return locations ? >35% ATRORT returns ? Oil or condensate rich wells only ? Primary…
  12. November 2016 Investor Presentation – Encana Corp – slide 12
    16 Alberta Simonette North Simonette South PORTFOLIO ADVANTAGE Core Positions Within the Best Basins Montney Permian Eagle Ford Duvernay 20 miles 15 miles 6 miles 12 miles Karnes Alberta B.C. Pipestone Tower Dawson South
  13. November 2016 Investor Presentation – Encana Corp – slide 13
    17 ENCANA?S PREMIUM RETURN INVENTORY Only Premium Inventory Consumed in Growth Plan Permian Basin Montney Eagle Ford Duvernay 10,000 well inventory 2,750 premium locations ~1,000 wells drilled in 5 year plan Premium assumption…
  14. November 2016 Investor Presentation – Encana Corp – slide 14
    18 ENCANA INCOME MARGIN All-In Profitability 5 0 10 15 20 25 30 Operating Margin F&D Non-well Capital Overhead Income Margin ? Premium returns at the corporate level ? Locations in the plan deliver an average of ~$25/BOE…
  15. November 2016 Investor Presentation – Encana Corp – slide 15
    19 ? Beat 20% per unit operating cost target ? One year ahead of target ? Permian horizontal opex under $4/BOE ? Continuous drive to reduce costs ? Executing on over 1,000 unique opportunities identified through multi-basin task…
  16. November 2016 Investor Presentation – Encana Corp – slide 16
    20 ? New pacesetters achieved in Permian & Duvernay ? Repeated pacesetters in Montney & Eagle Ford ? Pipestone average D&C costs down to $4.4MM/well INNOVATION Well Costs Still Dropping 7.1 4.9 4.7 4.2 8 6 4 2 0 2015 Average…
  17. November 2016 Investor Presentation – Encana Corp – slide 17
    21 ? Core acreage within top quality basin ? Acreage situated in northern/central sweet spot of the Midland Basin ? Productive intervals spanning over 5,000? of stratigraphy ? D&C cost leader ? D&C costs down from >$8 MM to less than…
  18. November 2016 Investor Presentation – Encana Corp – slide 18
    22 PERMIAN COMPETITOR BENCHMARKING Leading Acreage & Completion Design ? Encana wells among the top performers in Midland Basin ? Encana average IP180 of >500 BOE/d ? Data from >2,000 horizontal wells since 2014 normalized to…
  19. November 2016 Investor Presentation – Encana Corp – slide 19
    23 ? Optimal completion design matters ? Precision targeting ? Frac geometry ? Fluid and sand volumes ? Two new Glasscock wells on-stream in Q3 ? Forecasted IP180s of ~700 BOE/d ? 30% above type curve ? Minimized offset operator…
  20. November 2016 Investor Presentation – Encana Corp – slide 20
    24 PERMIAN RESERVOIR Zone Martin Midland* Glasscock Howard Clear Fork ? ? M. SPBY ? ? L. SPBY ? ? ? ? L. SPBY- 2nd ? ? ? ? WCMP A ? ? ? ? WCMP A- 2nd ? ? WCMP B ? ? ? WCMP C ? ? WCMP D / Cline ? ? ? ? Deep Targets ? ? Total…
  21. November 2016 Investor Presentation – Encana Corp – slide 21
    25 RECENT PERMIAN TRANSACTIONS SUPPORT QUALITY 2016 Industry Deals in Glasscock, Howard and Martin Counties *Implied acreage value calculated based on transaction value less the estimated value of purchased production based on…
  22. November 2016 Investor Presentation – Encana Corp – slide 22
    26 Permian MIDSTREAM AND MARKETING OVERVIEW Gathering system links production to pipeline hubs Permian ? Majority of oil production gathered via pipeline with access to multiple physical markets ? Firm gas gathering and NGL…
  23. November 2016 Investor Presentation – Encana Corp – slide 23
    27 Past & Future Pipeline Capacity Expansions Align with Growth PERMIAN BASIN FUNDAMENTALS Source: Wells Fargo Securities Forecast
  24. November 2016 Investor Presentation – Encana Corp – slide 24
    28 ENCANA PERMIAN 5 Year Growth Profile - 20 40 60 80 100 120 140 160 180 2016F 2017F 2018F 2019F 2020F 2021F MBOE/d ? >50% of Encana?s capital directed to the Permian ? Permian production expected to grow 3-4x ? 5 year…
  25. November 2016 Investor Presentation – Encana Corp – slide 25
    29 PERMIAN ? 2016 PROGRAM Focused Development to Drive Efficiencies ? Development focus in the Midland/Martin/Upton ? Longer laterals and more wells per pad to drive efficiency ? Maintain land position through a reduced vertical…
  26. November 2016 Investor Presentation – Encana Corp – slide 26
    30 ENCANA PERMIAN Gross Premium Return Inventory County Midland Martin Howard Glasscock Zone WOLFCAMP SPRABERRY SPRABERRY WOLFCAMP SPRABERRY WOLFCAMP SPRABERRY IP30 (BOE/d) 700 900 700 825 675 825 675 IP180 (BOE/d) 550 600 525 575…
  27. November 2016 Investor Presentation – Encana Corp – slide 27
    31 ENCANA IN THE MONTNEY A Premier North American Play Encana Core Montney Encana Non-core Montney *Estimated inventory based on 440 - 880 ft spacing; **Compound annual growth rate ? Encana?s Montney is a condensate play ? 5,900…
  28. November 2016 Investor Presentation – Encana Corp – slide 28
    32 ? Optimizing completion design ? Up to 55% increase in IP180 since 2014 ? < 65 foot cluster spacing ? Four new Pipestone wells on-stream in Q3 ? Average IP30 1,900 BOE/d with 1,050 bbls/d of condensate ? Montney margin growth…
  29. November 2016 Investor Presentation – Encana Corp – slide 29
    33 INFRASTRUCTURE PLAN Liquids Handling Capacity Supports Growth British Columbia ? Majority of upstream gathering, compression, and processing is third party midstream ? Current capacity ? ~1.0 Bcf/d gas and ~10,500 bbls/d…
  30. November 2016 Investor Presentation – Encana Corp – slide 30
    35 Montney MIDSTREAM AND MARKETING OVERVIEW ? Flexible midstream and transportation portfolio aligned with development program ? Diversified physical markets and liquid financial market ? AECO is the benchmark price for the most…
  31. November 2016 Investor Presentation – Encana Corp – slide 31
    36 ENCANA MONTNEY 5 Year Growth Profile - 200 400 600 800 1,000 1,200 1,400 2016F 2017F 2018F 2019F 2020F 2021F MMcf/d ? Development focused in condensate rich areas ? Operating marginT increases by >200% by 2021 ? Liquids…
  32. November 2016 Investor Presentation – Encana Corp – slide 32
    37 MONTNEY Cutbank Ridge Partnership (CRP) ? Partnership with a subsidiary of Mitsubishi ? Encana: 60% interest ? Mitsubishi: 40% interest ? Development areas ? Montney: Tower, Dawson North, Dawson South and Tumbler Ridge ?…
  33. November 2016 Investor Presentation – Encana Corp – slide 33
    38 MONTNEY ? 2016 PROGRAM Focused On Oil and Liquids Development ? Fill existing infrastructure to maintain production ? Development focused in the liquids rich zones and acreage ? Maintain highest quality land position in Alberta…
  34. November 2016 Investor Presentation – Encana Corp – slide 34
    39 ENCANA MONTNEY Gross Premium Return Inventory Region Tower Dawson South Pipestone Type Wet Gas Gas Condensate Rich Gas Condensate Wet Gas Condensate Gas Condensate Gas Condensate Rich Gas Very Rich Gas Condensate Volatile Oil…
  35. November 2016 Investor Presentation – Encana Corp – slide 35
    40 EAGLE FORD Core Position in the Oil Window ? Largely contiguous position in the Karnes Trough ? Most active and profitable trend in the Eagle Ford ? Continued well cost improvements ? Leading industry with well costs below $4MM…
  36. November 2016 Investor Presentation – Encana Corp – slide 36
    41 ? Optimizing completion design ? Latest design utilizes a thin fluid…
  37. November 2016 Investor Presentation – Encana Corp – slide 37
    42 PORTFOLIO ADVANTAGE Top Austin Chalk Results Devon 5H IP30: 2,140 BOE/d Devon 6H IP30: 1,000 BOE/d Encana 7H IP30: 2,000 BOE/d Encana 8H IP30: 3,100 BOE/d Gulftex 103H IP30: 2,250 BOE/d Gulftex 104H IP30: 2,300 BOE/d…
  38. November 2016 Investor Presentation – Encana Corp – slide 38
    44 ? Achieving substantial cost reductions ? Enhancing well inventory ? Delineating Upper Eagle Ford & Austin Chalk potential ? Optimizing completion design for Graben wells ? Confirm chevron downspacing for undeveloped acreage…
  39. November 2016 Investor Presentation – Encana Corp – slide 39
    45 ENCANA EAGLE FORD TYPE CURVES Gross Premium Return Inventory Type Curve Lower Eagle Ford IP30 (BOE/d) 950 IP180 (BOE/d) 650 EUR/Well (Mbbls) 370 EUR/Well (MBOE) 570 GOR 2,500 Gross Premium Return Inventory 130 Estimated…
  40. November 2016 Investor Presentation – Encana Corp – slide 40
    46 ? Large contiguous land base within core of play ? Significant growth opportunity ? 1,000 total locations, 500 premium locations ? Industry leading operating performance ? Multi-well pads and in-place infrastructure significantly…
  41. November 2016 Investor Presentation – Encana Corp – slide 41
    47 High CGR Gas Plants STRATEGIC INFRASTRUCTURE INVESTMENT Investment in Infrastructure Reducing Operating Costs Gross Facility Capacity Gas Capacity 155 MMcf/d Liquids Handling 30,000 bbls/d 10-29 15-31 5-31 Semcams KA…
  42. November 2016 Investor Presentation – Encana Corp – slide 42
    49 DUVERNAY JOINT VENTURE ? Brion (formerly Phoenix, a subsidiary of PetroChina) agreed to invest C$2.18 billion for 49.9% working interest ? C$1.18 billion up front cash in 2012 ? Further investment of C$1.0 billion during the…
  43. November 2016 Investor Presentation – Encana Corp – slide 43
    50 DUVERNAY ? 2016 PROGRAM Lowering Costs, Increasing Productivity ? Advance downspacing and completion pilots ? Increasingly material to production and cash flow ? 2/3 of activity focused in Simonette North ? Basin leading…
  44. November 2016 Investor Presentation – Encana Corp – slide 44
    51 ENCANA DUVERNAY Gross Premium Return Inventory Region Simonette South Simonette North Type Rich Gas Condensate Very Rich Gas Condensate Rich Gas Condensate Very Rich Gas Condensate IP90 (MMcf/d) 4 - 6 3 - 5 3.5 ? 4.5 2.5 ? 3.5…

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