$1B of capital, operating, and G&A savings in 3 years Annualized free funds flow growth of 14% Targeting net debt to adjusted EBITDA < 2.0x in 2019 Disciplined annual production growth of 6% Corporate breakeven of <…
A demonstrated track record of execution Safely executed 14 major oil sands expansion phases Reductions since 2014: ~50% sustaining capital ~30% operating costs ~30% G&A Improving reservoir performance and reducing GHG…
Targeting $1 billion of cumulative synergies Capital efficiencies ? Supply chain benefits driven by increased size and scale ? Re-designed well pads ? Longer-reach horizontal wells ? Multi-well pad development in Deep Basin ?…
Delivering on our potential 2017F target milestones Transaction 2018F ? 2021F i st afruglleyt fminialenscteodnes Q1 Continued to demonstrate strong operations ? Announced transformational acquisition ? Executed acquisition financing…
Paving the way to deleveraging Liquidity position supports investment grade ratings Targeting < 2T.0raxn nsaect tdioenb ti st ofu alldyj ufisntaendc EedBITDA in 2019 2017F 2018F 2019F $0.8 $0.8 $0.9 $0.5 billion cash on hand $4.4…
Deep inventory of short & long-cycle opportunities Short-cycle, high IRR potential in the Deep Basin Low-cost expansion potential in oil sands 0 50 100 150 200 250 2017F 2018F 2019F 2020F 2021F Deep Basin production (MBOE/d) 0…
Oil sands Deep Basin Conventional Disciplined production growth of 6% through 2021 ? Expect to demonstrate 6% production CAGR from 2018 ? 2021F ? Expanded portfolio enhances scale, flexibility, and generates significant long-term…
Technology deployment enhances value ? Targeting a $2/bbl reduction in oil sands sustaining capital costs over the next five years ? Each $1/bbl reduction in finding and development costs has the potential to represent an estimated…
$0 $20 $40 $60 $80 2014 2015 2016 2017F 2018F 2021F Path to sustainability under US$40/bbl WTI ? Focused on safe and reliable operations ? maintenance & sustaining capital ? Fundamentally changed how we operate our base business…
Capital allocation focused on two growth platforms Note: The above reflects our intended capital allocation priorities in the indicated WTI price environments. See Advisory. Stress case (< US$40/bbl WTI) Total capital ($ billions)…
Positioned to deliver value-added growth Deep inventory of short & long-cycle development Demonstrated execution excellence Well-defined, low-risk growth profile Positioned to increase returns to shareholders Shareholder value…
Liquidity position supports resilience Liquidity position Near-term debt reduction ? ~$4.5 billion reduction in net debt position expected by year end ? Targeting net debt to adjusted EBITDA < 2.0x in 2019 ? ~$5 billion liquidity…
Demonstrated track record of asset sales Targeting $4.0 - $5.0 billion announced by year end Deep Basin GORRs Infrastructure assets Marten Hills Oil sands GORR Non-core Deep Basin assets Pelican Lake Suffield Palliser Weyburn…
9 0.0 1.0 2.0 3.0 4.0 5.0 Net debt to adjusted EBITDA (times) Q2 2017F 2018F 2019F 2020F 2021F On track to achieving targeted leverage ? Optimizing capital structure and providing support to investment grade ratings ?…
Maintaining resilience in a lower price environment ? Repositioned the base business to be sustainable across a wider range of commodity prices ? Flexibility to reduce capital expenditures to $1.8 - $1.9 billion and remain within…
Cost reductions improve sustainability Oil sands sustaining capital Oil sands operating costs General & administrative costs ? > 60% reduction in oil sands sustaining capital costs ? Targeting a further $2/bbl reduction by 2021 ?…
Growth in free funds flow drives returns Total shareholder return remains a key component of our value proposition Dividend growth will be contingent upon achieving targeted leverage and growth in free funds flow Dividends must…
Ensuring financial resilience and flexibility Liquidity position and strategic hedging program support financial resilience Portfolio optionality supports targeted $4.0 - $5.0 billion of asset sales Positioning the portfolio to…
? Successfully executed 14 major capacity expansions representing 390,000 bbls/d of production capacity ? 26% cumulative annual growth rate since 2006 ? Sustaining capital per barrel down > 50%; operating costs per barrel down > 30%…
$0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5 2014 2015 2016 2017F 2018F 2019F 2020F 2021F Capital expenditures Operating margin ? Significant reduction in sustaining capital requirements ? Disciplined capital allocation…
2.0 3.7 2.0 5.1 2.4 3.4 3.9 4.4 3.7 2.9 1.0 2.0 3.0 4.0 5.0 6.0 0 100 200 300 400 1 2 3 4 5 6 7 8 9 10 11 April 2017 average production Portfolio-weighted SOR SOR reflects resource quality and execution Reinforcing…
Reducing SOR drives increased oil production Match facility size to reservoir Focus on achieving design SOR Develop technology to improve SOR performance Maximize production Steam capacity (fixed) SOR Oil production
14 Reducing SOR drives increased oil production Match facility size to reservoir Focus on achieving design SOR Develop technology to improve SOR performance Maximize production Steam capacity (fixed) SOR Oil production…
Current productive capacity phases A-G (bbls/d) 180,000 Regulatory approved capacity (bbls/d) 295,000 Reservoir depth ~450 meters Net pay 25 ? 30 meters High permeability 5 ? 10 darcies High oil saturation ~80% API bitumen 9? ? 11?…
? Superior start-up and steam circulation methods ? Advanced sub-surface equipment and design ? High pressure ramp up 2011 4D, or time-lapse seismic, can be acquired to determine changes in reservoir over an extended period. Lower…
0% 5% 10% 15% 20% 25% 30% 0 3 6 9 12 15 18 21 24 Months on production W10 Pad (2016) W07 Pad (2016) W08 Pad (2015) E08 Pad (2013) W02 Pad (2011) E15 Pad (2009) E20 Pad (2008) Improved start-up procedures on new pads Improved…
0 500 1,000 1,500 2,000 2,500 3,000 3,500 1 31 61 91 121 151 181 211 241 Day Average 1,400m well Average 965m well Christina Lake H09 pad ? 6 well pairs at 1,600m H-09 p ? Improved conformance allows us to drill longer wells…
0.0 1.0 2.0 3.0 4.0 5.0 2014 2015 2016/Current ? Improved programs and procedures drive efficiencies ? ~40% improvement in drilling time ? reduced completions time by ~30% ? Despite increased well lengths, efficiency gains…
Redesigned well pads drive cost improvements Improvements provide sustainable reduction in F&D RedesTirgannesda cwtieolnl pisa dfu allty C fhinraisntcinead Lake ? Improved modular and scalable design for well pairs and pads ?…
Foster Creek estimated capital savings of $500 million After: ? 8 pads ? 66 wells ? ~$600 million ? 220 MMbbl recoverable Before: ? 18 pads ? 120 wells ? ~$1.1 billion ? 200 MMbbl recoverable
Christina Lake estimated capital savings of $800 million Before: ? 19 pads ? 213 wells ? ~$1.6 billion ? 310 MMbbl recoverable After: ? 13 pads ? 105 wells ? ~$800 million ? 310 MMbbl recoverable
19 $0 $5 $10 $15 2014 2015 2016 2017F 2018F 2019F 2020F 2021F Focused innovation reduces sustaining capital ? Targeting oil sands sustaining capital of $5/bbl ? already reduced sustaining capital per barrel by more than 50% since…
19 $0 $5 $10 $15 2014 2015 2016 2017F 2018F 2019F 2020F 2021F Focused innovation reduces sustaining capital ? Targeting oil sands sustaining capital of $5/bbl ? already reduced sustaining capital per barrel by more than 50% since…
Aligning our workforce to support disciplined growth ? Organizational design improvements ? shift to functional organization ? reduced headcount to align with measured pace of development ? non-essential roles moved off site ?…
Focused on safety and optimizing maintenance ? Targeted approach to ongoing maintenance ? maximizing production throughput with prioritized maintenance ? Leveraging integrated facilities to mitigate impacts of planned maintenance ?…
22 Improvement drives sustainable reductions Redesigned well pads Lower F&D ? Improved modular & scalable design ? Scope reduction reduces costs ? Reduced well pad footprint Improved well design ? Quicker start-up ? Better…
Christina Lake Phase G demonstrates cost efficiency Christina Lake phase G project profile Note: After-tax IRR based on go-forward spending and flat US$55/bbl WTI. See Advisory. 0 10 20 30 40 50 60 2017F 2018F 2019F 2020F 2021F…
Illustrative Foster Creek phase H project profile 0 10 20 30 40 50 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 5% 40% 40% 15% $0 $100 $200 $300 $400 $500 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Foster Creek phase H…
Note: After-tax IRR based on go-forward spending and flat US$55/bbl WTI. See Advisory. Illustrative Narrows Lake phase A project profile 0 25 50 75 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 25% 30% 25% 15% 5% $0 $200 $400…
Consolidation of oil sands unveils additional value Greater Christina Lake region Greater Foster Creek region ? Project approval could be submitted in ~12 months ? Directly adjacent to Devon Jackfish 2 project ? producing ~45 mbbls/d…
20 25 30 35 40 45 50 55 60 65 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F 2026F Base case emissions intensity Full impementation of solvent & cogeneration Technology enables cost and carbon competitiveness ? Direct…
Technology drives further improvement in value Commercialized ? Blowdown boilers ? ESP?s ? Flow control devices ? New liner design ? Skystrat? drilling rig ? Wedge Well? technology 1 ? 3 years 3 ? 5 years ? Implementation of…
Enhancing existing technologies Realized benefits ? Superior start-up and steam circulation methods ? Advanced sub-surface equipment and design ? High pressure ramp up Future advancements ? Controlling ICD?s/OCD?s from surface…
Path to solvent commercialization ? Senlac butane pilot demonstrated 50% improvement in oil rate and 70%+ recovery of solvent Senlac butane test Christina Lake A01 butane test Q3 2017 2018 Foster Creek N-pad lean propane SAP…
Solvents create value and reduce emissions intensity SAP Benefits of solvents SAGD ? Decreases SOR by ~30% - 35% ? Increases individual well production rates up to 10% ? Increases growth capital 15 - 20% ? Decreases sustaining…
Implementation of solvents is a priority Illustrative deployment of solvents 0 5 10 15 20 Year 1 Year 2 Year 3 Year 4 Year 5 0 10 20 30 40 50 60 Year 1 Year 2 Year 3 Year 4 Year 5 Illustrative wells on solvent (Cumulative…
Partial upgrading improves product quality Bitumen blending process Upgrading technology 1.0 bbl of Bitumen 0.4 bbl of Diluent Pipeline specs: 19o API, 350 cs 1.4 bbl of blend Partial upgrading reduces transport & blending…
De-risking partial upgrading at commercial scale Ongoing field testing to validate results Process flow diagram for partial upgrading opportunities ? Pilot project capacity of 1,000 bbls/d operating since 2014 ? Field tested both…
Maximizing value and increasing margin SAGD process with partial upgrading Potential partial upgrading benefits Units Statistic Project oil throughput Mbbls/d 100 Capital efficiency $k/bbl/d $8 ? $12 Construction to first oil years…
Oil sands drives free funds flow Demonstrating strong operating performance and free funds flow Achieving structural cost & value improvements Advancing attractive organic growth opportunities Technology development focused on cost &…
Telephone Lake represents material opportunity ? Cenovus has 100% working interest ? Regulatory approval for 90,000 bbls/d received in 2014 (phases A & B) ? Expected ultimate production capacity of 300,000+ bbls/d ? Excellent…
Takeaway capacity provides certainty ? Cenovus has no near term takeaway capacity issues ? West Coast: Trans Mountain ? US Gulf Coast: Enbridge USGC/Flanagan South ? Bruderheim rail facility provides incremental optionality ?…
? Long-term and low-cost optionality ? Easy to expand quickly with minimal capital ? Ability to move wider variety of crudes ? Development optionality expected to generate additional value ? midstream value-add (blending, storage,…
Marine capability provides international access ? Actively engaged in various market access projects to gain access to global pricing ? Calgary and Houston offices capable of contracting vessels to move petroleum products to…
Refining capacity mitigates heavy oil differentials ? Refining assets help to mitigate exposure to wider light/heavy differentials ? Approximately 25% of total blended heavy oil volumes are mitigated with processing capacity ? Wood…
Benefiting from refinery location & processing capacity $0 $200 $400 $600 2017F 2018F 2019F 2020F 2021F Capital expenditures Operating margin ? Refineries have access to wide range of advantaged crudes ? Wood River accesses…
Expanding margin across the value chain Upstream Midstream Downstream ? Two growth platforms ? Deep Basin volumes provide economic hedge for natural gas consumption and potential for solvent use in the oil sands ? Cogeneration ?…
Maximizing margin through integration Create low-cost optionality to address market uncertainties Mitigate our exposure to light-heavy differentials Focus on margin improvement across the value chain Generate free funds flow through…
Deep Basin provides second growth platform Overview of Deep Basin ? One of the largest Deep Basin land positions ? Three core operating areas: Elmworth-Wapiti, Kaybob-Edson, and Clearwater ? Low decline production base coupled with…
Trevor Cossarini VP, Development & Portfolio Management 20+ years of experience in Deep Basin with ConocoPhillips, Chevron, Talisman, Burlington Dean Perkins Director, Operations 15+ years of experience in Deep Basin with…
No near-term takeaway constraints Asset overview Deep Basin infrastructure map ? ~1.4 BCF/d of net natural gas processing capacity and significant associated gathering infrastructure ? Infrastructure footprint spans the Deep Basin ?…
Deep Basin takeaway capacity and marketing Potential for growth and synergies with oil sands Current firm receipt capacity exceeds production levels ? Current firm receipt capacity exceeds forecast production levels ? sufficient…
Low decline, liquids rich production 2017F production 2017F decline rate Source: Peters & Co. E&P Overview Tables report dated May 29, 2017, company disclosures. See Advisory. 0 50 100 150 200 250 300 TOU VII CVE PEY MBOE/d ?…
Future upside potential across acreage Net acreage Drilling opportunities / 1,000 acres 0 500 1,000 1,500 2,000 2,500 3,000 3,500 CVE TOU VII PEY MM net acres ? Only ~430 locations are currently booked ? Undercapitalized…
Opportunity to reduce costs Net processing capacity Note: 0 250 500 750 1,000 1,250 1,500 TOU CVE PEY VII MMcf/d ? Owned and operated infrastructure is a competitive advantage ? Plan to optimize underutilized processing…
Disciplined approach to investment Estimated 2017F drilling plans 2017F capital expenditures 0 50 100 150 200 250 300 350 CVE VII PEY TOU Estimated net operated wells ? Taking a disciplined approach ? Capital expenditures to…
Over a decade of future drilling opportunities ~1,500 potential drilling opportunities identified Targeted type well information by key area IP365 (boe/d) Well costs ($MM,DC&T) Gas (%) IRR (%) NPV 10% before-tax ($MM)…
Focus on high quality and low risk locations Initial drilling plans through March 2018 focused on development and appraisal 2017 - 2018 drilling June July August September October November December January February March Elmworth /…
Maximizing value in the Deep Basin ? Expect to run a three rig program in 2017 and ramping up thereafter ? self funded growth from 120,000 BOE/d to approximately 240,000 BOE/d in 2021F ? represents a 15% production CAGR ? Capital…
Applying our experience to the Deep Basin > 500 horizontal SAGD well pairs currently producing over 360,000 bbls/d Reductions since 2014: ~50% sustaining capital ~30% operating costs > 300 operated horizontal wells drilled in…
Second growth platform repositions Cenovus Top-tier assets and people Self-funded doubling of production in five years Manufacturing approach drives execution and delivers free funds flow Short-cycle, low-decline production provides…
Elmworth asset overview Elmworth asset overview Elmworth area asset map ? Active operators include Tourmaline, ARC, Encana, Shell, and Crew with ~90% of wells targeting the Montney ? Low base decline rate of ~10% ? Strong operated…
Pipestone Montney development opportunity Pipestone Montney development plans Pipestone Montney acreage position ? ~25k gross acres with ~95% working interest ? thick 200m Montney interval with stack potential ? initial liquids yields…
Wapiti asset overview Wapiti asset overview Wapiti area asset map ? Active operators include NuVista, Shell, Modern, and Paramount with ~70% of wells targeting the Montney ? Low base decline rate of ~14% ? 25% working interest…
Wapiti Falher development opportunity Wapiti Falher development plans Wapiti Falher development plans ? Tight gas sand play with attractive economics ? continuation of the Falher trends northwest of established development in Kakwa ?…
Kaybob asset overview Kaybob asset overview Kaybob area asset map ? Industry activity dominated by Seven Generations and Tourmaline who are focused on the Montney and Falher/Wilrich ? Active development area with ~22% decline rate ?…
Kakwa Falher development opportunity Kakwa Falher development plans Kakwa Falher development plans ? One of the most economic plays in Western Canada ? stacked shoreface and fluvial channel play ? ~78,000 gross acres with ~65% working…
Edson asset overview Edson asset overview Edson area asset map ? Spirit River (Notikewin, Falher, Wilrich) dominate the activity with ~800 wells drilled in the past three years ? Development focused at Peco/Wolf with ~19% decline…
Edson Wilrich development opportunity Edson Wilrich development plans Edson Peco-Wolf development plans ? Emerging top quartile play in the Deep Basin ? ~150,000 net acres, majority of which is 100% working interest ? Planning first…
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