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September 2017 Corporate Presentation – Encana Corp

Encana Corp · Sep 5, 2017 · 66 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. September 2017 Corporate Presentation – Encana Corp – slide 1
  2. September 2017 Corporate Presentation – Encana Corp – slide 2
    ? Core positions in four of North America?s premier basins ? >23,000 total drilling locations ? ~11,000 potential premium return locations ? >35% ATROR? returns ? Oil or condensate rich wells only ? Primary zones only* ? Industry…
  3. September 2017 Corporate Presentation – Encana Corp – slide 3
    FOCUS ON CORPORATE RETURNS Combination of Innovation & Discipline *Premium locations are >35% ATROR? at $50 WTI & $3.00 NYMEX; ? Non-GAAP measures defined in advisories. For additional information regarding non-GAAP measures, including…
  4. September 2017 Corporate Presentation – Encana Corp – slide 4
    GROWTH WITHIN CASH FLOW FROM 2018 Driven by Production Efficiency & Margin Expansion ? 2017 production efficiency ahead by 10% versus guidance ? Driven by productivity gains & managing costs ? 2018 program expected to be another 10%…
  5. September 2017 Corporate Presentation – Encana Corp – slide 5
    DISCIPLINED FINANCIAL MANAGEMENT Balance Sheet Strength ? Growth within cash flow ? Well positioned for price volatility ? >75% hedged through second half 2017 on both gas & oil/C5+ ? Expect to have >$5 billion of liquidity at…
  6. September 2017 Corporate Presentation – Encana Corp – slide 6
    - 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…
  7. September 2017 Corporate Presentation – Encana Corp – slide 7
    ? 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…
  8. September 2017 Corporate Presentation – Encana Corp – slide 8
    MONTNEY Core Acreage in a Condensate Rich Play *Estimated inventory based on 440 - 990 ft spacing; **Compound annual growth rate ? Encana?s Montney is a condensate play ? 6,900 premium condensate-rich inventory* ? Stacked horizontal…
  9. September 2017 Corporate Presentation – Encana Corp – slide 9
    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…
  10. September 2017 Corporate Presentation – Encana Corp – slide 10
    ? 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…
  11. September 2017 Corporate Presentation – Encana Corp – slide 11
    ? Improving guidance ? Production guidance raised (ex. dispositions) ? Cash cost guidance lowered ? No change to capital guidance ? Core asset Q4/16 to Q4/17 production now expected to grow by 25-30% ? Original guidance was >20% ?…
  12. September 2017 Corporate Presentation – Encana Corp – slide 12
    STRONGLY AHEAD IN YEAR 1 OF 5 YEAR PLAN Core Assets Growth Ahead of Target ? Robust corporate margin? expansion through higher value product mix and lower costs ? Production ?bounce? of core assets ahead of schedule ? 25-30% core…
  13. September 2017 Corporate Presentation – Encana Corp – slide 13
    0 20 40 60 80 100 120 140 1Q17 2Q17F 3Q17F 4Q17F Mbbls/d Oil & Condensate 0 10 20 30 1Q17F 2Q17F 3Q17F 4Q17F Mbbls/d 900 1,100 1,300 1Q17 2Q17F 3Q17F 4Q17F MMcf/d Natural Gas 1H 2017 PRODUCTION AHEAD OF PLAN…
  14. September 2017 Corporate Presentation – Encana Corp – slide 14
    0 25 50 75 100 125 150 2016 2017F 2018F Total Oil and Condensate (MBbls/d) DOUBLING THE CORPORATE MARGIN BY 2018 * Corporate margin for 2017 based on YTD actual commodity prices (as of June 30th) and second half 2017 forward…
  15. September 2017 Corporate Presentation – Encana Corp – slide 15
    9,280 230 2,020 11,070 0 2,000 4,000 6,000 8,000 10,000 12,000 October 2016 Investor Day Drilled October-June 2017 Additions July 2017 PREMIUM RETURN INVENTORY GROWING Deepest High Quality Inventory in Industry ? Now…
  16. September 2017 Corporate Presentation – Encana Corp – slide 16
    BOOSTING PREMIUM TYPE CURVES Completions Driving Productivity ? Wells consistently outperforming type curves ? Cube development ? Optimized completions ? Improved targeting ? Permian premium return type curves increased ? 20%…
  17. September 2017 Corporate Presentation – Encana Corp – slide 17
    USING INNOVATION TO ADD VALUE Differentiated Pace of Improvement ? Rapid knowledge transfer across our assets ? Successfully implemented Advanced Completions across the core assets ? Thin fluid, tight cluster design ? Results…
  18. September 2017 Corporate Presentation – Encana Corp – slide 18
    INNOVATION BEYOND TECHNOLOGY Highly Sophisticated Planning & Logistics ? Seasoned operator with >4,500 horizontals drilled ? Leading EHS performance across industry ? Top D&C performance across portfolio ? Integrated supply chain…
  19. September 2017 Corporate Presentation – Encana Corp – slide 19
    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…
  20. September 2017 Corporate Presentation – Encana Corp – slide 20
    Differentiated Execution ? Multi-well pads centralizes development ? Optimized infrastructure ? Reduced costs through stockpiling, logistics ? Minimized footprint ? Multi-rig/spread approach increases efficiencies ? Faster drill…
  21. September 2017 Corporate Presentation – Encana Corp – slide 21
    DEVELOPING THE CUBE Permian Cube ? Operators must be able to efficiently execute at scale to create value and returns from the play ? Cube development approach: ? Developing entire stack will be critical to creating value ?…
  22. September 2017 Corporate Presentation – Encana Corp – slide 22
    MANAGING INFLATION ? Fully offset inflation with efficiency improvements in H1 ? On track to deliver flat well costs versus 2016 ? H1 capital spent and H1 wells drilled and on-stream match plan ? Seamless linkage between our supply…
  23. September 2017 Corporate Presentation – Encana Corp – slide 23
    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 $52.27/bbl WTI 3-Way Option $39.40 x…
  24. September 2017 Corporate Presentation – Encana Corp – slide 24
  25. September 2017 Corporate Presentation – Encana Corp – slide 25
    INCOME MARGIN AND RETURNS Premium Returns at the Corporate level *Premium locations are >35% ATROR? at $50 WTI & $3.00 NYMEX; ? Non-GAAP measures defined in advisories. For additional information regarding non-GAAP measures, including…
  26. September 2017 Corporate Presentation – Encana Corp – slide 26
    ENCANA?S PERMIAN ACREAGE Core Position in Midland Basin Martin Midland Howard Glasscock Upton Reagan Encana Land Basin Core ? In the Permian, execution efficiency at massive industrial scale is going to be critical ? North…
  27. September 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. September 2017 Corporate Presentation – Encana Corp – slide 28
    2017 Encana BOOSTING PERMIAN PRODUCTIVITY Leading Acreage & Completion Design *Data sourced from IHS, Inc. Results normalized to 7,500?, includes all wells from 2014-2016. Peers include APA, AREX, CPE, CVX, CXO, DVN, EGN, END, EOG,…
  29. September 2017 Corporate Presentation – Encana Corp – slide 29
    DEVELOPING THE CUBE ? Reservoir benefits ? Optimizes resource recovery ? Minimizes inter-wellbore communication ? Minimizes downtime on existing wells ? Eliminates ?parent-child? in-fill drilling ? No poor performing ?child? wells…
  30. September 2017 Corporate Presentation – Encana Corp – slide 30
    CUBE DEVELOPMENT RESULTS ? Development approach at premium returns ? Emphasis on well performance ? Accelerated learning ? Each pad producing stronger wells ? Abbie Laine wells outperforming Davidson Phase 1 by 25% after 90 days ?…
  31. September 2017 Corporate Presentation – Encana Corp – slide 31
    0 50 100 150 200 0 30 60 90 120 150 180 Normalized Cumulative Production* (MBOE) Days ? Wells in all counties consistently outperforming type curves ? Optimized completions ? Improved targeting ? Premium return type curves…
  32. September 2017 Corporate Presentation – Encana Corp – slide 32
    WATER INFRASTRUCTURE SOLUTION Improving Efficiency & De-risking Supply ? Integrated water infrastructure improves capital intensity and de-risks supply ? Capacity to support 3 frac crews per county in Midland and Martin ? Simple and…
  33. September 2017 Corporate Presentation – Encana Corp – slide 33
    PRODUCTION OPERATION HIGHLIGHTS Competitive LOE Performance ? Operating expense below $7/BOE ? Efficiency gains through multi-well pad development ? Reduced workover costs ? Remote monitoring and control ? Optimized artificial lift…
  34. September 2017 Corporate Presentation – Encana Corp – slide 34
    ~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…
  35. September 2017 Corporate Presentation – Encana Corp – slide 35
    MIDSTREAM AND MARKETING OVERVIEW Permian Basin Permian Colorado City Midland Crane Proximity to market and environment of responsive infrastructure development Encana has secured capacity on the Enterprise Midland to Sealy…
  36. September 2017 Corporate Presentation – Encana Corp – slide 36
    Past & Future Pipeline Capacity Expansions Align with Growth PERMIAN BASIN FUNDAMENTALS Source: Wells Fargo Securities - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 Q1\'12A Q3\'12A Q1\'13A Q3\'13A Q1\'14A…
  37. September 2017 Corporate Presentation – Encana Corp – slide 37
    PERMIAN RESERVOIR Zone Martin Midland/ Upton Glasscock Howard Clear Fork ? ? M. SPBY ? ? Jo Mill ? ? L. SPBY ? ? ? ? L. SPBY- 2nd ? ? ? ? WCMP A ? ? ? ? WCMP A- 2nd ? ? WCMP B ? ? ? WCMP C ? ? WCMP D / Cline ? ? ? ? Deep…
  38. September 2017 Corporate Presentation – Encana Corp – slide 38
    PREMIUM INCREASE OUTPACING DRILLING Gross Premium Return Inventory County Midland/ Upton Martin Howard Glasscock IP30 (BOE/d) 985 950 825 800 IP180 (BOE/d) 700 650 600 550 EUR/Well (Mbbls) 610 675 550 530 EUR/Well (MBOE) 1,020…
  39. September 2017 Corporate Presentation – Encana Corp – slide 39
    MONTNEY Core Position Pipestone (up to 4 laterals) Tower/Dawson (up to 6 laterals) 650? Montney 1,000? Montney Alberta Pipestone Tower Dawson South
  40. September 2017 Corporate Presentation – Encana Corp – slide 40
    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…
  41. September 2017 Corporate Presentation – Encana Corp – slide 41
    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…
  42. September 2017 Corporate Presentation – Encana Corp – slide 42
    DEVELOPING THE CUBE ? Multiple proven Montney benches on ECA lands ? New Dawson South 4-well pad confirming expectations ? Averaged >525 bbls/d liquids and >2,600 BOE/d IP30 ? Expect additional up-side with implementation of advanced…
  43. September 2017 Corporate Presentation – Encana Corp – slide 43
    SUSTAINED MONTNEY LIQUIDS GROWTH New Production Boosting Liquids Mix ? 2017 Montney program averages ~35% liquids ? Base Montney production averages ~10% ? By Q4/17, expected to average ~20% liquids production ? Montney liquids…
  44. September 2017 Corporate Presentation – Encana Corp – slide 44
    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. **Saturn Phase 2 includes…
  45. September 2017 Corporate Presentation – Encana Corp – slide 45
    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 ?…
  46. September 2017 Corporate Presentation – Encana Corp – slide 46
    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…
  47. September 2017 Corporate Presentation – Encana Corp – slide 47
    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 ?…
  48. September 2017 Corporate Presentation – Encana Corp – slide 48
    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 ?…
  49. September 2017 Corporate Presentation – Encana Corp – slide 49
    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…
  50. September 2017 Corporate Presentation – Encana Corp – slide 50
    EAGLE FORD Core Position Karnes Austin Chalk GR RD RHOB Operator Acreage Map Areas of Operation
  51. September 2017 Corporate Presentation – Encana Corp – slide 51
    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 ?…
  52. September 2017 Corporate Presentation – Encana Corp – slide 52
    EAGLE FORD Gross Premium Return Inventory Type Curve Eagle Ford Austin Chalk IP30 (BOE/d) 1200 1400 IP180 (BOE/d) 950 1040 EUR/Well (Mbbls) 490 590 EUR/Well (MBOE) 650 770 GOR (scf/bbl) 2,000 1,500 Gross Premium Return Inventory…
  53. September 2017 Corporate Presentation – Encana Corp – slide 53
    DUVERNAY Core Position 12 miles Alberta Simonette North Simonette South Gr NPHI DPHI RD
  54. September 2017 Corporate Presentation – Encana Corp – slide 54
    STRATEGIC INFRASTRUCTURE CONNECTIVITY Built For Purpose Midstream Solution Gross Facility Capacity Gas Capacity 155 MMcf/d Liquids Handling 30,000 bbls/d 10-29 15-31 5-31 Semcams KA Keyerra Simonette ? Plants inter-connected…
  55. September 2017 Corporate Presentation – Encana Corp – slide 55
    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…
  56. September 2017 Corporate Presentation – Encana Corp – slide 56
    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…
  57. September 2017 Corporate Presentation – Encana Corp – slide 57
    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 IP30 (BOE/d) 1,550 ? 1,650 1,600 - 1,700 1,200 ?…
  58. September 2017 Corporate Presentation – Encana Corp – slide 58
  59. September 2017 Corporate Presentation – Encana Corp – slide 59
    LIQUIDS VALUE CHAIN Projected Composition of Total Liquids Production *2017F based on company guidance as at July 21, 2017; production ranges are not additive; **Includes plant condensate Liquids primarily comprised of higher-value…
  60. September 2017 Corporate Presentation – Encana Corp – slide 60
    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…
  61. September 2017 Corporate Presentation – Encana Corp – slide 61
    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…
  62. September 2017 Corporate Presentation – Encana Corp – slide 62
    36% 30% 28% 23% 23% 0% 10% 20% 30% 40% 50% 60% 70% 80% YE 2013 YE 2014 YE 2015 YE 2016 Q2 2017 ? $4.5B fully committed, unsecured, revolving credit facilities ? $4.5B available at June 30, 2017 ? Committed to July 2020 ?…
  63. September 2017 Corporate Presentation – Encana Corp – slide 63
    DISCIPLINED FINANCIAL MANAGEMENT Debt Portfolio as at June 30, 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 2038…
  64. September 2017 Corporate Presentation – Encana Corp – slide 64
    REDUCING LONG TERM T&P COMMITMENTS Legacy Costs Continue to Drop $0 $200 $400 $600 $800 $1,000 $1,200 2014 2015 2016 2017F 2018F 2019F 2020F 2021F Non-core Core $MM Transportation & Processing Commitments at December 31, 2016…
  65. September 2017 Corporate Presentation – Encana Corp – slide 65
    2017F ENCANA CORPORATE GUIDANCE (1) US$, U.S. GAAP July 21, 2017 2017F Capital Investment ($ billions) Total Capital Investment 1.6 ? 1.8 Production (after royalties) Liquids (Mbbls/d) 127 ? 132 % Oil & Condensate (2) 80 ? 85% %…
  66. September 2017 Corporate Presentation – Encana Corp – slide 66
    Operating Costs ($/BOE at 6:1 ratio) Upstream Operating Expense (3) 3.60 ? 4.00 Transportation and Processing 6.25? 6.50 Administrative Expense (3) 1.40 ? 1.60 Production, Mineral & Other Taxes (% of Revenue (4)) 3.75 ? 4.25% 1.…

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