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February 2017 Investor Presentation – Encana Corp

Encana Corp · Feb 10, 2017 · 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. February 2017 Investor Presentation – Encana Corp – slide 1
  2. February 2017 Investor Presentation – Encana Corp – slide 2
    1 - 1,000 2,000 3,000 4,000 2016 2017F 2018F 2019F 2020F 2021F 5 YEAR CAPITAL, PRODUCTION & CASH FLOW OUTLOOK Self-Funding Capital Program Post 2017 ? Projected >300% cash flowT* growth ? Focus on high margin production…
  3. February 2017 Investor Presentation – Encana Corp – slide 3
    2 ? Core positions in four of North America?s premier basins ? Over 20,000 total inventory locations ? ~10,000 potential premium return locations ? >35% ATRORT returns ? Oil or condensate rich wells only ? Primary zones only* ?…
  4. February 2017 Investor Presentation – Encana Corp – slide 4
    3 ? 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 >$8 MM to less than…
  5. February 2017 Investor Presentation – Encana Corp – slide 5
    4 MONTNEY Core Acreage in a Condensate Rich Play *Estimated inventory based on 440 - 880 ft spacing; **Compound annual growth rate ? Encana?s Montney is a condensate play ? 5,900 premium condensate-rich inventory* ? Stacked…
  6. February 2017 Investor Presentation – Encana Corp – slide 6
    5 EAGLE FORD Core Position in the Oil Window ? Largely contiguous position in the Karnes Trough ? Most active and profitable trend in the Eagle Ford ? Continued well cost improvements ? Industry leading well costs ? Well inventory…
  7. February 2017 Investor Presentation – Encana Corp – slide 7
    6 ? Large contiguous land base within core of play ? Significant growth opportunity ? 1,000 total locations, 500 premium locations ? Industry leading operating performance ? Multi-well pads and in-place infrastructure significantly…
  8. February 2017 Investor Presentation – Encana Corp – slide 8
    9 2017 GUIDANCE 2017F Guidance Capital Investment ($MM) 1,600 ? 1,800 Natural Gas (MMcf/d) 1,150 ? 1,200 Total Liquids (Mbbls/d) 125 ? 130 % Oil and Condensate* 80 ? 85% % Natural Gas Liquids 15 ? 20% Total Production (MBOE/d) 320…
  9. February 2017 Investor Presentation – Encana Corp – slide 9
    10 0 20 40 60 80 100 120 140 1Q17F 2Q17F 3Q17F 4Q17F Mbbls/d Oil & Condensate 200 250 300 350 400 1Q17F 2Q17F 3Q17F 4Q17F MBOE/d Total Production 0 10 20 30 1Q17F 2Q17F 3Q17F 4Q17F Mbbls/d NGL (C2 ? C4) 1,000…
  10. February 2017 Investor Presentation – Encana Corp – slide 10
    11 DOUBLING THE CORPORATE MARGIN BY 2018 * Corporate margin for 2017/18 calculated at $55 WTI and $3.00 NYMEX **2016 production adjusted for divested assets . T Non-GAAP measures defined in advisories. For additional information…
  11. February 2017 Investor Presentation – Encana Corp – slide 11
    12 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Full-year of Montney Plants IMPROVING PRODUCTION EFFICIENCY FOR 2018 Driven by Capital Allocation and Plant Timing Improving Exit Production Efficiency $/BOE/d 100 200…
  12. February 2017 Investor Presentation – Encana Corp – slide 12
    13 Self-Funding Program 2018 OUTLOOK ? Self-funding capital program ? >400 MBOE/d total annual production ? >30% growth in core asset production 4Q17 to 4Q18 ? Leverage drops to ~2x D/DACF
  13. February 2017 Investor Presentation – Encana Corp – slide 13
    14 VALUE FOCUS AT ENCANA Delivering Premium Returns and Margins 5 0 10 15 20 25 30 Operating Margin F&D Non-well Capital G&A and Interest Expense Income Margin $25.00/BOE >$13.00/ BOE $8.00/ BOE $0.60/BOE 2017-2021 ECA…
  14. February 2017 Investor Presentation – Encana Corp – slide 14
    15 RISK MANAGEMENT PROGRAM Adds Greater Certainty to Cash Flow and De-Risks Capital Program 0 25 50 75 100 2017 * 2018 Volume (Mbbls/d) Oil and Condensate Positions WTI Fixed Price Swap $52.20/bbl WTI 3-Way Option WTI Fixed…
  15. February 2017 Investor Presentation – Encana Corp – slide 15
    16 MET OR EXCEEDED TARGETS 2016 Highlights Q4 2016 FY 2016 Upstream Operating Cash Flow* Excluding Hedging ($MM) 368 994 Upstream Operating Cash Flow* Including Hedging ($MM) 372 1,356 Non-GAAP Cash FlowT ($MM) 302 838 - $ per…
  16. February 2017 Investor Presentation – Encana Corp – slide 16
    17 DIFFERENTIATED EXECUTION EFFICIENCY ? 60 - 70% of 2017 program locked in at contracted rates or self sourced ? Ramped up to 2017 activity level in Q4 2016 ? Managing the supply chain ? Self-sourcing sand, water, OCTG, chemicals,…
  17. February 2017 Investor Presentation – Encana Corp – slide 17
    19 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
  18. February 2017 Investor Presentation – Encana Corp – slide 18
    20 ENCANA?S POTENTIAL 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…
  19. February 2017 Investor Presentation – Encana Corp – slide 19
    21 ENCANA PERMIAN 5 Year Growth Profile - 20 40 60 80 100 120 140 160 180 2016 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…
  20. February 2017 Investor Presentation – Encana Corp – slide 20
    22 PERMIAN INCOME MARGIN All-In Profitability ? Premium returns at the corporate level ? Locations in the Permian deliver ~$30/BOE operating margin ? NRI F&D ~$9.00/BOE ? Non-well capital of $0.60/BOE ? G&A and interest expense…
  21. February 2017 Investor Presentation – Encana Corp – slide 21
    23 PERMIAN COMPETITOR BENCHMARKING Leading Acreage & Completion Design ? Encana wells among the top performers in Midland Basin ? Encana average IP180 of >500 BOE/d ? Data from >2,000 horizontal wells since 2014 normalized to…
  22. February 2017 Investor Presentation – Encana Corp – slide 22
    24 PERMIAN RESERVOIR Zone Martin Midland* Glasscock Howard Clear Fork ? ? M. SPBY ? ? L. SPBY ? ? ? ? L. SPBY- 2nd ? ? ? ? WCMP A ? ? ? ? WCMP A- 2nd ? ? WCMP B ? ? ? WCMP C ? ? WCMP D / Cline ? ? ? ? Deep Targets ? ? Total…
  23. February 2017 Investor Presentation – Encana Corp – slide 23
    25 Permian MIDSTREAM AND MARKETING OVERVIEW Permian Colorado City Midland Crane Pipelines to Cushing and Gulf Coast Permian: Proximity to market and environment of responsive infrastructure development Secured capacity on…
  24. February 2017 Investor Presentation – Encana Corp – slide 24
    26 Past & Future Pipeline Capacity Expansions Align with Growth PERMIAN BASIN FUNDAMENTALS Source: Wells Fargo Securities 2017 Incremental Announcements Pipeline Nameplate Capacity Adds (Mbbls/d) BridgeTex +100 (Q2 2017) Cactus…
  25. February 2017 Investor Presentation – Encana Corp – slide 25
    27 PERMIAN 2017 Program FY 2017 Plan Acreage (net acres) 127,000 Average Working Interest (%) 91% Average Royalty Rate (%) 20 ? 25% Development Capital (net) ($MM) $775 ? 850 Rig Count 5 HZ Wells Drilled (net) 135 ? 145 HZ Wells…
  26. February 2017 Investor Presentation – Encana Corp – slide 26
    28 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. February 2017 Investor Presentation – Encana Corp – slide 27
    29 ENCANA MONTNEY 5 Year Growth Profile - 200 400 600 800 1,000 1,200 1,400 2016 2017F 2018F 2019F 2020F 2021F MMcf/d ? Development focused in condensate rich areas ? Operating marginT increases by >200% by 2021 ? Liquids…
  28. February 2017 Investor Presentation – Encana Corp – slide 28
    30 MONTNEY INCOME MARGIN All-In Profitability ? Premium returns at the corporate level ? Montney delivers ~$14/BOE operating margin ? NRI F&D ~$4.00/BOE ? Non-well capital of $0.60/BOE ? G&A & interest expense ~$3.00/BOE ?…
  29. February 2017 Investor Presentation – Encana Corp – slide 29
    31 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. February 2017 Investor Presentation – Encana Corp – slide 30
    33 Montney MIDSTREAM AND MARKETING OVERVIEW ? Staggered firm service contracts into NGTL ? Sufficient takeaway for Montney gas growth ? Domestic market for condensate ? Market premiums to incentivize imports from the U.S. ? Firm…
  31. February 2017 Investor Presentation – Encana Corp – slide 31
    34 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 ?…
  32. February 2017 Investor Presentation – Encana Corp – slide 32
    35 MONTNEY 2017 Program FY 2017 Plan Acreage (net acres) 384,000 British Columbia (CRP) 292,000 Alberta (Pipestone) 92,000 Working Interest (%) 74% (includes Pipestone) Average Royalty Rate (%) 5 ? 10% Development Capital (net)…
  33. February 2017 Investor Presentation – Encana Corp – slide 33
    36 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…
  34. February 2017 Investor Presentation – Encana Corp – slide 34
    37 EAGLE FORD INCOME MARGIN All-In Profitability ? Premium returns at the corporate level ? Locations in the Eagle Ford deliver ~$28/BOE operating margin ? NRI F&D ~$10.00/BOE ? Non-well capital of $0.60/BOE ? G&A and interest…
  35. February 2017 Investor Presentation – Encana Corp – slide 35
    38 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…
  36. February 2017 Investor Presentation – Encana Corp – slide 36
    40 EAGLE FORD 2017 Program FY 2017 Plan Acreage (net acres) 42,500 Average Working Interest (%) 91% Average Royalty Rate (%) 20 ? 25% Development Capital (net) $MM $235 ? 265 Rig Count 2 Wells Drilled (net) 50 ? 60 Wells on…
  37. February 2017 Investor Presentation – Encana Corp – slide 37
    41 ENCANA EAGLE FORD TYPE CURVES Gross Premium Return Inventory Type Curve Lower Eagle Ford Austin Chalk* IP30 (BOE/d) 950 950 IP180 (BOE/d) 650 900 EUR/Well (Mbbls) 370 590 EUR/Well (MBOE) 570 770 GOR 2,500 1,500 Gross Premium…
  38. February 2017 Investor Presentation – Encana Corp – slide 38
    42 DUVERNAY 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 Duvernay deliver ~$25/BOE operating…
  39. February 2017 Investor Presentation – Encana Corp – slide 39
    43 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…
  40. February 2017 Investor Presentation – Encana Corp – slide 40
    45 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…
  41. February 2017 Investor Presentation – Encana Corp – slide 41
    46 DUVERNAY 2017 Program FY 2017 Plan Acreage (net acres) 335,000 Simonette 93,000 Willesden Green 214,000 Edson/Pinto 28,000 Average Working Interest (%) 50% Average Royalty Rate (%) 5 ? 10% Development Capital (net) $MM $60 ?…
  42. February 2017 Investor Presentation – Encana Corp – slide 42
    47 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…
  43. February 2017 Investor Presentation – Encana Corp – slide 43
    50 LIQUIDS VALUE CHAIN Projected Composition of Total Liquids Production *2017F based on company guidance as at February 16, 2017; production ranges are not additive; **Includes plant condensate Liquids primarily comprised of…

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