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July 2017 Corporate Presentation – Cenovus Energy Inc.

Cenovus Energy Inc. · Jul 13, 2017 · 48 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. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 1
  2. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 2
    Note: Values are approximate. (1) Forecast production based on June 20, 2017 guidance and reflects pro rata volumes as the acquisition closed May 17, 2017. *Includes an additional 0.5 million net acres of exclusive lease rights to lease…
  3. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 3
    Delivering on our potential 2017F target milestones Transaction 2018F ? 2021F target milestones Q1 Continued to demonstrate strong operations ? Announced transformational acquisition ? Executed acquisition financing plan ? Resumed…
  4. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 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)…
  5. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 5
    A compelling five-year outlook ? Targeting $4.0 - $5.0 of announced asset sales in 2017 ? Pelican Lake and Suffield progressing ? preparing data rooms for Palliser and Weyburn ? Expect to achieve cumulative synergies of $1 billion…
  6. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 6
    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 ?…
  7. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 7
    Capital allocation priorities 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) $1.5 - $1.8 Safe &…
  8. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 8
    Liquidity position supports resilience Liquidity position Near-term debt reduction ~4.5 billion ? ~$4.5 billion reduction in net debt position expected by year end ? Targeting net debt to adjusted EBITDA < 2.0x in 2019 ? ~$5 billion…
  9. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 9
    Demonstrated track record of asset sales >$4.0 billion since 2010 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…
  10. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 10
  11. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 11
    Sustainability drives free funds flow Low corporate decline rates Improved sustainability Free funds flow growth over time Note: Peters & Co Limited. Peers include: APA, CNQ, CPG, DVN, ECA, EOG, HSE, IMO, SU, TOU, VII. See Advisory.…
  12. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 12
    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…
  13. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 13
    ? 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…
  14. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 14
    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 pad - 6 well pairs at 1,600m ? Improved conformance…
  15. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 15
    Redesigned well pads drive cost improvements Improvements provide sustainable reduction in F&D Transaction Redesigned well pisa dfu allty C fhinraisntcinead Lake ? Improved modular and scalable design for well pairs and pads ?…
  16. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 16
    Improvement drives sustainable reductions Redesigned well pads Lower F&D Targeting $8 ? $10/bbl ? Improved modular & scalable design ? Scope reduction reduces costs ? Reduced well pad footprint Improved well design ? Quicker…
  17. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 17
    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…
  18. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 18
    Christina Lake overview Phase Phase B A Phase C Phase D Optimization CDE Phase F Phase E Christina Lake production history Key facts and reservoir characteristics Successfully executed 7 SAGD expansions and optimizations…
  19. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 19
    Phase G builds on Christina Lake success Note: After-tax IRR based on go-forward spending and flat US$55/bbl WTI. See Advisory. Christina Lake phase G project profile 0 10 20 30 40 50 60 2017F 2018F 2019F 2020F 2021F 2022F 30%…
  20. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 20
    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?…
  21. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 21
    Foster Creek phase H on track to be sanction ready Note: After-tax IRR based on go-forward spending and flat US$55/bbl WTI. See Advisory. Illustrative Foster Creek phase H project profile 0 10 20 30 40 50 Year 1 Year 2 Year 3…
  22. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 22
    Commercializing solvents at Narrows Lake Note: After-tax IRR based on go-forward spending and flat US$55/bbl WTI. See Advisory. Illustrative Narrows Lake phase A project profile 0 25 50 75 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6…
  23. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 23
    Solvents create value and reduce emissions intensity ? Decreases SOR by ~30% - 35% ? Increases individual well production rates up to 10% ? Increases growth capital 15 - 20% ? Decreases sustaining capital by 10 - 30% ? Reduces…
  24. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 24
    Deep Basin provides second growth platform Overview of Deep Basin ? One of the largest Deep Basin land positions ? Three core operating areas: Elmworth-Wapiti, Kaybob-Edson, and Clearwater ? Low decline production base coupled with…
  25. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 25
    No near-term takeaway constraints Asset overview Deep Basin infrastructure map ? ~1.4 BCF/d of net natural gas processing capacity and significant associated gathering infrastructure ? Infrastructure footprint spans the Deep Basin ?…
  26. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 26
    Low decline, liquids rich production 2017F production 2017F decline rate Source: Peters & Co. E&P Overview Tables report dated May 29, 2017, company disclosures. See Advisory. 0 50 100 150 200 250 300 TOU VII CVE PEY MBOE/d ?…
  27. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 27
    Future upside potential across acreage Net acreage Drilling opportunities / 1,000 acres 0 500 1,000 1,500 2,000 2,500 3,000 3,500 CVE TOU VII PEY MM net acres ? Only ~430 locations are currently booked ? Undercapitalized…
  28. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 28
    Over a decade of future drilling opportunities ~1,500 potential drilling opportunities identified Targeted type well information by key area IP365 (boe/d) Well costs ($MM,DC&T) Gas (%) IRR (%) NPV 10% before-tax ($MM)…
  29. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 29
    Upside potential from stacked pay Upside potential from stacked pay Target formations Formation Elmworth Wapiti Kaybob Edson Clearwater Totals Cardium 164,813 224,221 341,855 259,195 990,085 Dunvegan 882,906 189,718 232,261 1,304,886…
  30. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 30
    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 /…
  31. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 31
  32. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 32
    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…
  33. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 33
    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 ?…
  34. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 34
    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…
  35. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 35
    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…
  36. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 36
    Clearwater Spirit River development opportunity Clearwater Spirit River development plans Clearwater Spirit River development plans ? Proven top quartile play in the Deep Basin with high industry activity levels ? significant liquids…
  37. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 37
    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 ?…
  38. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 38
    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…
  39. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 39
    Current hedge positions for 2017 Hedges at May 31, 2017 Volume Price Crude ? Brent Collars January - June 30,000 bbls/d US$49.78/bbl - US$62.08/bbl Crude ? Brent Fixed Price January - June 10,000 bbls/d US$54.06/bbl Crude ? WTI…
  40. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 40
    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…
  41. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 41
    Refining operating margin sensitivities -$250 $0 $250 $500 $750 $1,000 $1,250 $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 Chicago crack spread - US$/bbl US$20/bbl US$15/bbl US$10/bbl Refining operating margin net (LIFO basis)…
  42. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 42
    Creating value through social and governance performance ? SER Committee of the Board provides oversight of environment and sustainability performance ? Enterprise Risk Management program, practices and policy help ensure active and…
  43. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 43
    Advancing our environmental performance ? Rigorous regulatory framework ensures environment considerations throughout project lifecycle ? Dedicated internal environment team focused on mitigating environmental risks ? Ongoing…
  44. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 44
    2017 Guidance Production Dec 8 2016 Full year 2017 Foster Creek 76 ? 82 Christina Lake 96 ? 102 Total oil sands 172 ? 184 Oil & NGLs ? Natural gas ? Total Deep Basin ? Oil & liquids 51 ? 56 Natural gas 340 ? 360 Total legacy…
  45. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 45
  46. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 46
    2017 Corporate Guidance - C$, before royalties June 20, 2017 Guidance of all operating metrics includes forecast impacts of the acquisition effective May 18, 2017 UPSTREAM OIL SANDS Production Capital expenditures Operating costs…
  47. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 47
    LEGACY CONVENTIONAL Production Light/Medium Oil Natural gas (3) (Mbbls/d) Operating costs (Mbbls/d) rates (%) (MMcf/d) Capital expenditures Operating costs Effective royalty rates (%) Effective royalty Oil & liquids (2)…
  48. July 2017 Corporate Presentation – Cenovus Energy Inc. – slide 48
    Investor relations contacts Kam Sandhar Vice-President, Investor Relations & Corporate Development kam.sandhar@cenovus.com 403.766.5883 Steven Murray Manager, Investor Relations steven.murray@cenovus.com 403.766.3382 Graham…

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