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May 2017 Corporate Presentation – Encana Corp

Encana Corp · May 18, 2017 · 67 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 2017 Corporate Presentation – Encana Corp – slide 1
  2. May 2017 Corporate Presentation – Encana Corp – slide 2
    ? Core positions in four of North America?s premier basins ? Over 20,000 total inventory locations ? ~10,000 potential premium return locations ? >35% ATROR? returns ? Oil or condensate rich wells only ? Primary zones only* ?…
  3. May 2017 Corporate Presentation – Encana Corp – slide 3
    - 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 flow?* growth ? Focus on high margin production amplifies…
  4. May 2017 Corporate Presentation – Encana Corp – slide 4
    ? 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 $5…
  5. May 2017 Corporate Presentation – Encana Corp – slide 5
    MONTNEY Core Acreage in a Condensate Rich Play *Estimated inventory based on 440 - 880 ft spacing; **Compound annual growth rate ? Encana?s Montney is a condensate play ? 5,900 premium condensate-rich inventory* ? Stacked horizontal…
  6. May 2017 Corporate Presentation – Encana Corp – slide 6
    EAGLE FORD Core Position in the Oil Window ? Largely contiguous position in the Karnes Trough ? Most active and profitable trend in the Eagle Ford ? Continued well cost improvements ? Industry leading well costs ? Well inventory…
  7. May 2017 Corporate Presentation – Encana Corp – slide 7
    ? Large contiguous land base within core of play ? Significant growth opportunity ? 1,000 total locations, 500 premium locations ? Industry leading operating performance ? Multi-well pads and in-place infrastructure significantly…
  8. May 2017 Corporate Presentation – Encana Corp – slide 8
    2017 GUIDANCE 2017F Guidance Capital Investment ($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. May 2017 Corporate Presentation – Encana Corp – slide 9
    0 20 40 60 80 100 120 140 1Q17 2Q17F 3Q17F 4Q17F Mbbls/d Oil & Condensate 250 300 350 400 1Q17 2Q17F 3Q17F 4Q17F MBOE/d Total Production 0 10 20 30 1Q17F 2Q17F 3Q17F 4Q17F Mbbls/d NGL (C2 ? C4) 1,000 1,200…
  10. May 2017 Corporate Presentation – Encana Corp – slide 10
    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 . ? Non-GAAP measures defined in advisories. For additional information regarding…
  11. May 2017 Corporate Presentation – Encana Corp – slide 11
    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 100 200 300…
  12. May 2017 Corporate Presentation – Encana Corp – slide 12
    VALUE FOCUS AT ENCANA Delivering Premium Returns and Margins 0 5 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…
  13. May 2017 Corporate Presentation – Encana Corp – slide 13
    INDUSTRY LEADING VALUE CREATOR ? Best Rocks ? Exclusive focus on premium return locations ? Multi-basin advantage ? Growing margins ? Operational Excellence ? Innovation leader ? Developing the cube ? Sophisticated planning &…
  14. May 2017 Corporate Presentation – Encana Corp – slide 14
    DEVELOPING THE CUBE ? Above-ground execution benefits ? Increased D&C efficiencies ? Multi-well pads ? Faster drill times ? Multi-rig spreads ? Increased pumping horsepower utilization ? Integrated infrastructure ? Shared services at…
  15. May 2017 Corporate Presentation – Encana Corp – slide 15
    DEVELOPING THE CUBE Differentiated Execution ? Above-ground execution benefits ? Increased D&C efficiencies ? Multi-well pads ? Faster drill times ? Multi-rig spreads ? Increased pumping horsepower utilization ? Integrated…
  16. May 2017 Corporate Presentation – Encana Corp – slide 16
    0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 0 30 60 90 Equivalent Production (BOE/d) Days Total Abbie Laine Pad Production Total Type Curve LEADER IN STACKED ROCKS ? Premium returns at development scale ? Emphasis…
  17. May 2017 Corporate Presentation – Encana Corp – slide 17
    INNOVATION & EFFICIENCY Technology & Planning ? Structured innovation across the portfolio and real-time knowledge transfer ? Montney ? Initial advanced completion designs ? Real-time fibre optic installed downhole to determine…
  18. May 2017 Corporate Presentation – Encana Corp – slide 18
    THE MULTI-BASIN ADVANTAGE ? Tight cluster, thin fluid, fine proppant first piloted in the Eagle Ford ? Created new benchmark performance ? Base design for Austin Chalk completions ? Being applied to other core assets ? 8 new Austin…
  19. May 2017 Corporate Presentation – Encana Corp – slide 19
    THE MULTI-BASIN ADVANTAGE ? Real-time knowledge transfer across our portfolio ? 50-60% improvement in productivity Advanced Completions Outperforming 0 50 100 150 200 250 0 50 100 150 Cumulative Production (MBOE) Days…
  20. May 2017 Corporate Presentation – Encana Corp – slide 20
    MANAGING INFLATION ? Fully offset inflation with efficiency improvements in Q1 ? On track to deliver flat well costs versus 2016 ? Q1 capital spent and Q1 wells drilled and on-stream match plan ? Well costs flat in Q1 with 17% more…
  21. May 2017 Corporate Presentation – Encana Corp – slide 21
    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 Drilling in the Eagle Ford
  22. May 2017 Corporate Presentation – Encana Corp – slide 22
    RISK MANAGEMENT PROGRAM Managing Cash Flow & Balance Sheet Risk 0 25 50 75 100 2017 * 2018 Volume (Mbbls/d) Oil and Condensate Positions WTI Fixed Price Swap $52.15/bbl WTI 3-Way Option $38.74 x $49.46 x $60.08 /bbl Risk…
  23. May 2017 Corporate Presentation – Encana Corp – slide 23
  24. May 2017 Corporate Presentation – Encana Corp – slide 24
    ENCANA?S POTENTIAL PREMIUM RETURN INVENTORY Only Premium Inventory Consumed in Growth Plan Permian Basin Montney Eagle Ford Duvernay 10,000 well inventory 2,750 premium locations ~1,000 wells drilled in 5 year plan Premium…
  25. May 2017 Corporate Presentation – Encana Corp – slide 25
    PERMIAN Core Position Martin Midland Howard Glasscock Upton Reagan Clear Fork C Spraberry Dean WolfCamp Cline Strawn Atoka Barnett Woodford Inventory Basin Core
  26. May 2017 Corporate Presentation – Encana Corp – slide 26
    PERMIAN 2017 Program FY 2017 Plan Acreage (net acres) 127,000 Average Working Interest (%) 91% Average Royalty Rate (%) 20 ? 25% Development Capital (net) ($MM) $775 ? 850 Rig Count 5 HZ Wells Drilled (net) 135 ? 145 HZ Wells…
  27. May 2017 Corporate Presentation – Encana Corp – slide 27
    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 CAGR* 30% ?…
  28. May 2017 Corporate Presentation – Encana Corp – slide 28
    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…
  29. May 2017 Corporate Presentation – Encana Corp – slide 29
    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 7,500?…
  30. May 2017 Corporate Presentation – Encana Corp – slide 30
    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…
  31. May 2017 Corporate Presentation – Encana Corp – slide 31
    ~15% 2017F PERMIAN RISK MANAGEMENT PROGRAM Market Access & Price Risk Management 17 Mbbls/d ($0.83)/bbl 25 Mbbls/d to Option for up Houston to 25 Mbbls/d to Houston 2018F - 2020F Midland Exposure EPD* Midland to Houston 35…
  32. May 2017 Corporate Presentation – Encana Corp – slide 32
    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 Echo Pipeline ?…
  33. May 2017 Corporate Presentation – Encana Corp – slide 33
    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 +60…
  34. May 2017 Corporate Presentation – Encana Corp – slide 34
    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) 550 600 525 575 500 575 500…
  35. May 2017 Corporate Presentation – Encana Corp – slide 35
    MONTNEY Core Position Pipestone (up to 4 laterals) Tower/Dawson (up to 6 laterals) 650? Montney 1,000? Montney Alberta Pipestone Tower Dawson South B.C.
  36. May 2017 Corporate Presentation – Encana Corp – slide 36
    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) $MM…
  37. May 2017 Corporate Presentation – Encana Corp – slide 37
    0 100 200 300 400 500 600 700 800 900 1,000 Gross Operated Production (MMcf/d) ENCANA IS THE LARGEST MONTNEY PRODUCER Montney Producers at a Glance Source : Industry data ? December 2016 production Montney ECA net…
  38. May 2017 Corporate Presentation – Encana Corp – slide 38
    ENCANA MONTNEY 5 Year Growth Profile - 200 400 600 800 1,000 1,200 1,400 2016 2017F 2018F 2019F 2020F 2021F MMcf/d ? Delivering industry leading cash flow growth and returns ? Condensate rich development focus ? Diversified…
  39. May 2017 Corporate Presentation – Encana Corp – slide 39
    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 ? Corporate…
  40. May 2017 Corporate Presentation – Encana Corp – slide 40
    MONTNEY INFRASTRUCTURE PLAN Liquids Handling Capacity Supports Growth & Flexibility *Condensate and NGL capacities assume a 30% cut on C3+ facility capacities. All volumes are before shrink and royalties. **Sa turn Phase 2 includes…
  41. May 2017 Corporate Presentation – Encana Corp – slide 41
    AGREEMENT WITH VERESEN MIDSTREAM Fee-for-Service Structure ? Maximizing flexibility while managing execution ? Encana/CRP* sold a portion of Montney infrastructure to Veresen Midstream & entered into gathering arrangement in 2015 ?…
  42. May 2017 Corporate Presentation – Encana Corp – slide 42
    MONTNEY RISK MANAGEMENT PROGRAM Market Access & Price Risk Management* 475 MMcf/d 100 MMcf/d to Sumas/Malin 80 MMcf/d to Chicago 316 MMcf/d to Dawn Less than 33% 2018F - 2020F AECO Exposure Physical Export Transport** AECO…
  43. May 2017 Corporate Presentation – Encana Corp – slide 43
    WESTERN CANADIAN NATURAL GAS FUNDAMENTALS Existing Available Capacity Exceeds Export Forecast Source: Encana Fundamentals, IHS Bcf/d 0 2 4 6 8 10 12 14 16 2005 2007 2009 2011 2013 2015 2017F 2019F Exports Export Capacity ?…
  44. May 2017 Corporate Presentation – Encana Corp – slide 44
    ENCANA WCSB MIDSTREAM AND MARKETING OVERVIEW ? NGTL system has ~11 BCF/d of capacity, >15,000 miles of pipeline, and thousands of receipt & delivery points ? Firm takeaway contracted for 100% expected ECA Montney gas growth ?…
  45. May 2017 Corporate Presentation – Encana Corp – slide 45
    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 ? Cadomin ?…
  46. May 2017 Corporate Presentation – Encana Corp – slide 46
    MONTNEY Gross Premium Return Inventory Region Tower Dawson South Pipestone Type Wet Gas Gas Condensate Rich Gas Condensate Wet Gas Gas Condensate Gas Condensate Rich Gas Condensate Very Rich Gas Condensate Volatile Oil…
  47. May 2017 Corporate Presentation – Encana Corp – slide 47
    EAGLE FORD Core Position Karnes Eagle Ford Austin Chalk Gr RD RHOB
  48. May 2017 Corporate Presentation – Encana Corp – slide 48
    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 Stream…
  49. May 2017 Corporate Presentation – Encana Corp – slide 49
    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 expense…
  50. May 2017 Corporate Presentation – Encana Corp – slide 50
    Eagle Ford MIDSTREAM AND MARKETING OVERVIEW ? Firm gas gathering and NGL processing aligned with asset development program ? Infield gathering and extensive market assets in place to ensure flow and downstream connectivity ?…
  51. May 2017 Corporate Presentation – Encana Corp – slide 51
    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…
  52. May 2017 Corporate Presentation – Encana Corp – slide 52
    DUVERNAY Core Position 12 miles Alberta Simonette North Simonette South 140? Duvernay
  53. May 2017 Corporate Presentation – Encana Corp – slide 53
    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 ? 70…
  54. May 2017 Corporate Presentation – Encana Corp – slide 54
    DUVERNAY INCOME MARGIN All-In Profitability 0 5 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…
  55. May 2017 Corporate Presentation – Encana Corp – slide 55
    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 Keyerra…
  56. May 2017 Corporate Presentation – Encana Corp – slide 56
    Duvernay ? Condensate sales via pipeline to premium Edmonton market center ? Firm market access aligned with development program ? Achieved liquids price upgrade while minimizing midstream capex via Alliance pipeline ? Diversified…
  57. May 2017 Corporate Presentation – Encana Corp – slide 57
    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…
  58. May 2017 Corporate Presentation – Encana Corp – slide 58
    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…
  59. May 2017 Corporate Presentation – Encana Corp – slide 59
  60. May 2017 Corporate Presentation – Encana Corp – slide 60
    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…
  61. May 2017 Corporate Presentation – Encana Corp – slide 61
    WESTERN CANADIAN CONDENSATE FUNDAMENTALS Premium Condensate Market Source: RBC Capital Markets and Government Data 0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 0.55 0.60 0.65 2000 2002 2004 2006 2008 2010 2012…
  62. May 2017 Corporate Presentation – Encana Corp – slide 62
    0 20 40 60 80 100 120 140 2012 Avg - Column1 Column2 2017F $MM BUILDING ON OUR TRACK RECORD Delivering Corporate Cost Savings ? Normalized interest* on long term debt run rate ~$70 MM/quarter ? Interest expense reduced as a…
  63. May 2017 Corporate Presentation – Encana Corp – slide 63
    36% 30% 28% 23% 23% 0% 10% 20% 30% 40% 50% 60% 70% 80% YE 2013 YE 2014 YE 2015 YE 2016 Q1 2017 ? $4.5B fully committed, unsecured, revolving credit facilities ? $4.5B available at March 31st, 2017 ? Committed to July 2020…
  64. May 2017 Corporate Presentation – Encana Corp – slide 64
    DISCIPLINED FINANCIAL MANAGEMENT Debt Portfolio as at March 31st, 2017 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 2037…
  65. May 2017 Corporate Presentation – Encana Corp – slide 65
    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 $MM Transportation & Processing Commitments* *Represents…
  66. May 2017 Corporate Presentation – Encana Corp – slide 66
    2017F ENCANA CORPORATE GUIDANCE US$, U.S. GAAP February 16, 2017 2017F Capital Investment ($ billions) Total Capital Investment 1.6 ? 1.8 Production(after royalties) Natural Gas (MMcf/d) 1,150 ? 1,200 Liquids (Mbbls/d) 125 ? 130…
  67. May 2017 Corporate Presentation – Encana Corp – slide 67
    Operating Costs ($/BOE at 6:1 ratio) Upstream Operating Expense (2) 3.75 ? 4.25 Transportation and Processing 6.50 ? 7.00 Administrative Expense (2) 1.40 ? 1.60 Production, Mineral & Other Taxes (% of Revenue (3)) 3.75 ? 4.25% 1.…

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