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January 2018 Corporate Presentation – Encana Corp

Encana Corp · Jan 31, 2018 · 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. January 2018 Corporate Presentation – Encana Corp – slide 1
  2. January 2018 Corporate Presentation – Encana Corp – slide 2
    ENCANA Our Objectives ? North American leader in: ? Generating free cash flowT ? ~$1.5 billion cumulative over plan ? Cash flowT growth ? ~ 25% CAGR 2017-2022 ? Corporate returns ? Growing ROCET through the plan…
  3. January 2018 Corporate Presentation – Encana Corp – slide 3
    FOCUS ON QUALITY CORPORATE RETURNS Our Business Works Today Strategy Execution ? World class portfolio of assets ? Track record of delivery ? Execution excellence ? Culture of innovation both technical and commercial ?…
  4. January 2018 Corporate Presentation – Encana Corp – slide 4
    AN OPERATOR INVESTORS CAN COUNT ON Strong Finish to 2017 ? Core asset production growth above top end of 2017 guidance ? Up ~ 31% from Q4 2016, surpassing original guidance ? Permian production exceeded 80 MBOE/d ?…
  5. January 2018 Corporate Presentation – Encana Corp – slide 5
    FOCUS ON CORPORATE RETURNS Differentiated Results ? Independent analysis of over 50 North American E&P?s ? Encana ?set to deliver above average ROCET through 2019?* ? Assumptions / Methodology* ? Projected ROCET…
  6. January 2018 Corporate Presentation – Encana Corp – slide 6
    AN OPERATOR INVESTORS CAN COUNT ON Increasing Value & Resiliency 2017F-2022F Cash FlowT ~25% CAGR ? Updated 5 year plan is better across the board ($MM) 4,000 20 ? Maintaining…
  7. January 2018 Corporate Presentation – Encana Corp – slide 7
    5 YEAR PLAN Production Growth Within Cash Flow ? Resilient to operational risk ? Focus on high margin production ? Continuous improvement drives quality corporate returns ? Liquids production CAGR of ~20% ? Leading…
  8. January 2018 Corporate Presentation – Encana Corp – slide 8
    RESILIENT BUSINESS MODEL Capital Discipline & Risk Management ? Multi-basin portfolio ? Short cycle capital ? Highly focused capital allocation ? Integrated supply chain ? Flexible commercial arrangements ?…
  9. January 2018 Corporate Presentation – Encana Corp – slide 9
    WORLD CLASS PORTFOLIO Encana\'s Resource In Context ? Core positions in four of North America?s premier basins ? >23,000 total inventory locations ? YTD premium inventory increased by ~6x 2017 drilling activity ? ~11,000…
  10. January 2018 Corporate Presentation – Encana Corp – slide 10
    PERMIAN BASIN Premier North American Basin ? Developing the cube ? Critical to creating value at industrial scale ? Reservoir & above-ground benefits ? Natural extension of our experience & capabilities ? Type…
  11. January 2018 Corporate Presentation – Encana Corp – slide 11
    ENCANA IN THE MONTNEY A Premier North American Play ? Encana?s Montney is a condensate play ? 6,900 premium condensate-rich inventory* ? Stacked horizontal development ? Over 1,000? of pay, up to 6 stacked horizons ?…
  12. January 2018 Corporate Presentation – Encana Corp – slide 12
    EAGLE FORD Core Position in the Oil Window ? Largely contiguous position in the Karnes Trough ? Most active and profitable trend in the Eagle Ford ? Completion innovations leading to better wells ? 2017 well inventory…
  13. January 2018 Corporate Presentation – Encana Corp – slide 13
    DUVERNAY Premier Position in World Class Reservoir ? Large contiguous land base within core of play ? Significant growth opportunity ? Industry leading operating performance ? Multi-well pads and integrated infrastructure…
  14. January 2018 Corporate Presentation – Encana Corp – slide 14
    INNOVATION LEADERSHIP AT ENCANA A Competitive Advantage Subsurface ? Geo-cellular reservoir modeling to identify the best rocks ? Leveraging massive proprietary analytics dataset (core, logs, seismic, micro-seismic,…
  15. January 2018 Corporate Presentation – Encana Corp – slide 15
    INNOVATION IN OPERATIONS Driven By Culture ? Chiefs organizational structure ? Promotes rapid transfer of technology between plays ? Rapidly translated success in tight cluster design from Eagle Ford to other plays ?…
  16. January 2018 Corporate Presentation – Encana Corp – slide 16
    INNOVATION SUCCESS Identifying Optimal Completion Design and Geometry ? Applying advanced completions to high-density, stacked development ? Key principles: ? Tight cluster spacing and optimal hydraulics maximize fracture…
  17. January 2018 Corporate Presentation – Encana Corp – slide 17
    EXECUTION EXCELLENCE Efficient Operations are Safe Operations ? Leveraging our experience ? >4,500 horizontal wells drilled ? Rapid knowledge transfer between basins ? Leading industry safety performance…
  18. January 2018 Corporate Presentation – Encana Corp – slide 18
    CUBE DEVELOPMENT ABOVE-GROUND BENEFITS Development at Industrial Scale ? Highly efficient, agile development Multi-well ? Multi-well pads Pads ? Higher utilization of services & infrastructure Water Multi-rig, ?…
  19. January 2018 Corporate Presentation – Encana Corp – slide 19
    CUBE DEVELOPMENT Differentiated Execution ? Reservoir benefits ? Optimizes resource recovery ? Minimizes inter-wellbore communication ? Less downtime on existing wells ? Eliminates ?parent-child? in-fill drilling…
  20. January 2018 Corporate Presentation – Encana Corp – slide 20
    MANAGING INFLATION Delivering in a Busier Environment ECA D&C Cost Breakdown ? Fully offsetting inflation with efficiency improvements ? Capital spent & wells drilled/on-stream match plan 40% of well cost is drilling ?…
  21. January 2018 Corporate Presentation – Encana Corp – slide 21
    RISK MANAGEMENT PROGRAM Adds Greater Certainty to Cash Flow and De-Risks Capital Program Volume (Mbbls/d) Oil and Condensate Positions 100 $39.40 x $49.95 x $61.40 $36.88 x $47.17 x $54.49…
  22. January 2018 Corporate Presentation – Encana Corp – slide 22
  23. January 2018 Corporate Presentation – Encana Corp – slide 23
    ENCANA?S POTENTIAL PREMIUM RETURN INVENTORY Only Premium Inventory Consumed in Growth Plan Permian Basin Montney Premium 12,000 well inventory 9,600 well inventory Inventory 3,450 premium locations 6,900 premium…
  24. January 2018 Corporate Presentation – Encana Corp – slide 24
    ENCANA?S PERMIAN ACREAGE Core Position in Midland Basin ? In the Permian, execution efficiency at industrial scale is going to be critical ? Industry leader in driving efficiency at scale Martin Howard Cowden Pad…
  25. January 2018 Corporate Presentation – Encana Corp – slide 25
    PERMIAN TRACK RECORD OF DELIVERY Advanced Completions Fueling >60% Permian Growth ? 2017 program delivers >60% growth Q416 to Q417 ? Strong finish to the year, with >50 Mbbls/d of oil and >80 MBOE/d in Q4 ? Highly…
  26. January 2018 Corporate Presentation – Encana Corp – slide 26
    WELL PRODUCTIVITY Encana Wells Outpacing Peer Results Oil Production IP180/1,000ft (bbls/d) 75 Producers with high density stack development 50 25 0 Peer 1 Peer 2 ECA Peer 3 Peer 4 Peer 5…
  27. January 2018 Corporate Presentation – Encana Corp – slide 27
    PERMIAN MAXIMIZING RETURNS AND RECOVERY 2017 Cube Development Results ? Step-change productivity increases ? Cube development approach continues to evolve in 2017 ? Data-driven innovation ? Added new benches ?…
  28. January 2018 Corporate Presentation – Encana Corp – slide 28
    CUBE DEVELOPMENT ABOVE-GROUND BENEFITS Effective Water Management ? Improves capital efficiency and de-risks supply ? 3 frac spreads per hub ? Simple and effective catch basin design Martin County ? Central Water Resource…
  29. January 2018 Corporate Presentation – Encana Corp – slide 29
    EXPANDING MARGINS Reducing Operating Costs ? Improving efficiencies ? Company-wide effort ? Accountability at the operator level ? Working smarter ? >80% of produced water on pipe ? >70% of production on remote…
  30. January 2018 Corporate Presentation – Encana Corp – slide 30
    PERMIAN 5 Year Growth Profile ? ~50% of Encana?s capital directed to the Permian in 2018 ? Permian production expected to grow 3x ? 5 year CAGR 25% ? Quality inventory with scale ? No infrastructure or midstream…
  31. January 2018 Corporate Presentation – Encana Corp – slide 31
    MIDSTREAM AND MARKETING OVERVIEW Permian Gathering system links production to Colorado pipeline hubs City Midland Pipelines connect to Cushing and Crane Gulf Coast Permian Permian: Proximity to…
  32. January 2018 Corporate Presentation – Encana Corp – slide 32
    MIDSTREAM AND MARKETING OVERVIEW Permian Gathering system links production to Colorado pipeline hubs City Midland Pipelines connect to Cushing and Crane Gulf Coast Permian Permian: Proximity to…
  33. January 2018 Corporate Presentation – Encana Corp – slide 33
    PERMIAN RISK MANAGEMENT PROGRAM Market Access & Price Risk Management 2018F 2019F - 2020F 10 Mbbls/d ($1.09)/bbl ~10% 19 Mbbls/d 37 Mbbls/d ~40% to Houston ($0.78)/bbl 39 Mbbls/d to Houston Midland…
  34. January 2018 Corporate Presentation – Encana Corp – slide 34
    PERMIAN RESERVOIR Massive Potential with Stacked Benches Zone Martin Midland/ Glasscock Howard Upton Clear Fork ? ? M. SPBY ? ? Jo Mill ? ? L. SPBY ? ? ? ? L. SPBY- 2nd ? ? ? ? WCMP A ? ? ? ? WCMP A-…
  35. January 2018 Corporate Presentation – Encana Corp – slide 35
    PREMIUM INCREASE OUTPACING DRILLING Gross Premium Return Inventory County Midland/ Martin Howard Glasscock Upton IP30 (BOE/d) 985 950 825 800 IP180 (BOE/d) 700 650 600 550 EUR/Well (Mbbls) 610 675 550 530 EUR/Well…
  36. January 2018 Corporate Presentation – Encana Corp – slide 36
    MONTNEY Core Position Alberta B.C. Tower Dawson South Pipestone 40mi Tower/Dawson Pipestone (up to 6 laterals) (up to 4 laterals) 650?Montney…
  37. January 2018 Corporate Presentation – Encana Corp – slide 37
    MONTNEY WELL PRODUCTIVITY Top Performance vs. Peers 600 BOE/d) 500 ECA IP180 yields of (bbls/d, 400 30-300 bbls/MMcf IP180 300 Condensate 100 200 Focused on higher margin, higher…
  38. January 2018 Corporate Presentation – Encana Corp – slide 38
    MONTNEY TRACK RECORD OF DELIVERY Delivering Condensate Growth ? Well targeting and completion design driving well productivity ? 28 well Tower cube average IP30 of 700 bbls/d condensate ? Recent Dawson South Upper Montney…
  39. January 2018 Corporate Presentation – Encana Corp – slide 39
    AGREEMENT WITH VERESEN MIDSTREAM Fee-for-Service Structure All 3 Montney Plants On-Stream ? Tower, Sunrise and Saturn plants on-stream ? Facilities came on ahead of schedule and under budget ? Encana designed, built and…
  40. January 2018 Corporate Presentation – Encana Corp – slide 40
    MONTNEY INFRASTRUCTURE PLAN Liquids Handling Capacity Supports Growth & Flexibility Net Encana Capacity Icon Name Anticipated Gas* Condensate* NGLs* Timing (MMcf/d) (bbls/d) (bbls/d) Existing…
  41. January 2018 Corporate Presentation – Encana Corp – slide 41
    MONTNEY SUSTAINED CONDENSATE PRODUCTION Detailed Reservoir Engineering ? Condensate-gas ratio (CGR) varies with time ? Type curves reflect phase behaviour ? Initial condensate ratios up to 800 bbls/MMcf in the VO window…
  42. January 2018 Corporate Presentation – Encana Corp – slide 42
    ENCANA MONTNEY Operating Cost Performance ? Workforce collaboration across the asset ? Optimizing water handling ? Managing field work using automated work orders and integrated scheduling ? Leveraging technology through…
  43. January 2018 Corporate Presentation – Encana Corp – slide 43
    ENCANA MONTNEY Operating Cost Performance ? Workforce collaboration across the asset ? Optimizing water handling ? Managing field work using automated work orders and integrated scheduling ? Leveraging technology through…
  44. January 2018 Corporate Presentation – Encana Corp – slide 44
    WESTERN CANADIAN MARKET FUNDAMENTALS Premium Condensate Market & Natural Gas Export Basin ~97% YTD WTI Price Realization Condensate is a premium product in Western Canada ~4% 2018F total revenue exposed to AECO Combination…
  45. January 2018 Corporate Presentation – Encana Corp – slide 45
    WCSB RISK MANAGEMENT PROGRAM Market Access & Price Risk Management* 2018F 2019F - 2020F ~ 20% 475 MMcf/d < 33% 500 MMcf/d Less than ($0.87)/Mcf? ($0.88)/Mcf? 1/2 316 MMcf/d to Dawn…
  46. January 2018 Corporate Presentation – Encana Corp – slide 46
    MONTNEY Cutbank Ridge Partnership (CRP) ? Partnership with a subsidiary of Mitsubishi ?Encana: 60% interest ?Mitsubishi: 40% interest ? Investment structure (C$2.9B) ?C$1.45 billion upfront in 2012 ?Further investment…
  47. January 2018 Corporate Presentation – Encana Corp – slide 47
    MONTNEY Gross Premium Return Inventory Region Tower Dawson South Pipestone Type Wet Gas Gas Rich Gas Wet Gas Gas Gas Rich Gas Very Rich Gas Volatile Oil Condensate Condensate Condensate Condensate…
  48. January 2018 Corporate Presentation – Encana Corp – slide 48
    LEADING OPERATOR Top Karnes County Producers Top Performance vs Peers* Eagle Ford Oil Production IP180/1,000ft (bbls/d) 200 150 100 50 0 *Data sourced from IHS, Inc. Includes all data…
  49. January 2018 Corporate Presentation – Encana Corp – slide 49
    EAGLE FORD TRACK RECORD OF DELIVERY Generating Free Cash FlowT ? Strong performance from Eagle Ford and Austin Chalk ? Maintaining production while generating free cash flowT ? Focus on completions design evolution to…
  50. January 2018 Corporate Presentation – Encana Corp – slide 50
    EXPANDING MARGINS Reducing Operating Costs ? Leveraging company-wide effort ? Optimized repairs, maintenance, and workovers ? Shifting work in-house ? Supply management gains ? Lower costs on chemicals, water…
  51. January 2018 Corporate Presentation – Encana Corp – slide 51
    MIDSTREAM AND MARKETING OVERVIEW Eagle Ford ? Firm gas gathering and NGL processing Close proximity to market and aligned with asset development program well-developed infrastructure ? Infield gathering and extensive…
  52. January 2018 Corporate Presentation – Encana Corp – slide 52
    EAGLE FORD Gross Premium Return Inventory Type Curve Eagle Ford Austin Chalk IP30 (BOE/d) 1200 1400 ? 220 premium return IP180 (BOE/d) 950 1040 inventory locations EUR/Well (Mbbls) 490 590 ? Testing…
  53. January 2018 Corporate Presentation – Encana Corp – slide 53
    LARGEST PRODUCER IN THE PLAY Duvernay Production at a Glance Duvernay Acreage Top Productivity vs. Peers* 60 Encana Land Alberta IP180/1,000ft…
  54. January 2018 Corporate Presentation – Encana Corp – slide 54
    DUVERNAY TRACK RECORD OF DELIVERY Delivering Record Performance ? Strong production performance ? Asset generating free cash flowT ? Advanced completion design ? Encouraging early results ? Industry leading costs and…
  55. January 2018 Corporate Presentation – Encana Corp – slide 55
    EXPANDING MARGINS Duvernay Operating Cost Performance ? Dramatic reduction in operating costs Duvernay Direct Operating Cost Reductions ? Three plants on-stream since 2014 ? Optimized for liquids handling ?…
  56. January 2018 Corporate Presentation – Encana Corp – slide 56
    MIDSTREAM AND MARKETING OVERVIEW Duvernay Condensate to Edmonton market center Duvernay Alliance Pipeline to U.S. Midwest (Chicago) ? Condensate sales via pipeline to premium Edmonton market…
  57. January 2018 Corporate Presentation – Encana Corp – slide 57
    STRATEGIC INFRASTRUCTURE CONNECTIVITY Duvernay Built For Purpose Midstream Solution ? Plants inter-connected through pipeline network Gross Facility Capacity ? Can operate in NGL recovery or rejection mode Gas Capacity 155…
  58. January 2018 Corporate Presentation – Encana Corp – slide 58
    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…
  59. January 2018 Corporate Presentation – Encana Corp – slide 59
  60. January 2018 Corporate Presentation – Encana Corp – slide 60
    SAN JUAN BASIN Evaluating Liquids Growth Potential ? 2017 operation highlights ? 6 well program ? 6,100? average completed lateral length ? Evaluation Program ? Target best rock ? Advanced completion design ? Well spacing trial ?…
  61. January 2018 Corporate Presentation – Encana Corp – slide 61
  62. January 2018 Corporate Presentation – Encana Corp – slide 62
    LIQUIDS VALUE CHAIN Projected Composition of Total Liquids Production Canada US 2017F* 2017F Pricing 2017F* 2017F Pricing (Mbbls/d) (%WTI) (Mbbls/d) (%WTI) Oil 0 ? 1 81% 75 ? 78 96% Condensate** 22 ?…
  63. January 2018 Corporate Presentation – Encana Corp – slide 63
    WESTERN CANADIAN CONDENSATE FUNDAMENTALS Premium Condensate Market Condensate demand in western Canada is expected to outstrip domestic supply ? with imports bridging the gap Source: RBC Capital Markets and…
  64. January 2018 Corporate Presentation – Encana Corp – slide 64
    BUILDING ON OUR TRACK RECORD Maintaining Corporate Efficiency ? Low overhead costs enable returns Encana and Peers: G&A per BOE and Production MBOE/d *** ? Interest expense on debt stable with long term fixed rate…
  65. January 2018 Corporate Presentation – Encana Corp – slide 65
    DISCIPLINED FINANCIAL MANAGEMENT Access to Ample Liquidity Through 2020 ? $4.5B fully committed, unsecured, revolving credit facilities ? $4.5B available at September 30, 2017 ? Committed to July 2020 ? No use of…
  66. January 2018 Corporate Presentation – Encana Corp – slide 66
    DISCIPLINED FINANCIAL MANAGEMENT Debt Portfolio as at September, 2017 ? Total debt reduced by ~$3 billion since Y/E 2014 ? Significant financial flexibility with no debt maturities until 2019 ? ~75% of fixed rate long-term…
  67. January 2018 Corporate Presentation – Encana Corp – slide 67
    2017F ENCANA CORPORATE GUIDANCE (1) US$, U.S. GAAP July 21, 2017 2017F Capital Investment ($ billions) Total Capital Investment 1.6 ? 1.8 Production (after royalties) Liquids (Mbbls/d) 127…

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