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March 2018 Investor Presentation – Cenovus Energy Inc.

Cenovus Energy Inc. · Mar 15, 2018 · 46 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. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 1
  2. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 2
    About Cenovus TSX, NYSE | CVE Enterprise value C$ 24 billion Shares outstanding 1,229 million Horn River British Columbia Alberta Saskatchewan Telephone Lake 2018F production Fort St. John…
  3. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 3
    Disciplined capital allocation drives shareholder value Sustain current assets and dividend Manage balance sheet to investment Return to High-return grade shareholders: growth…
  4. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 4
    Demonstrated track record of asset sales ? Evaluating non-core assets ? Continuing to evaluate portfolio for non-core divestitures Deep Basin non-core Clearwater assets currently being marketed, ~15,000 BOE/d Fort St. John…
  5. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 5
    Liquidity position supports resilience Liquidity position $0.6 billion $4.5 billion cash on hand available on credit facility Credit ratings S&P Moody?s DBRS Fitch BBB Ba2 BBB…
  6. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 6
    Targeting $1 billion of cumulative cost reductions ~$500 million Capital efficiencies ? Supply chain benefits driven by increased size and scale ? Re-designed well pads ? Longer-reach horizontal wells ? Multi-well pad…
  7. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 7
    Cost reductions improve sustainability Oil sands sustaining capital Oil sands operating costs General & administrative costs $/bbl $/bbl $/BOE $15.00 $15.00 $4.00 $12.00 $12.00…
  8. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 8
    Sustainability drives free funds flow Low corporate decline rates Improved sustainability Free funds flow yield 2018F corporate decline rate Implied WTI breakeven 2019F free funds flow yield (percent)…
  9. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 9
    Improvement drives sustainable reductions Improved Longer horizontal conformance wells ? Better conformance along the full horizontal well length ? Lower SOR ? Higher oil rates per well ? Capture a larger drainage…
  10. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 10
    New design improves well conformance Major improvements ? Superior start-up and steam circulation methods ? Advanced sub-surface equipment and design ? High pressure ramp up Results in ? Better conformance along the…
  11. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 11
    Improved start-up procedures on new pads ? Technology driven field improvements Longer reach horizontal well pairs ? Drilling improvements ? Inflow/outflow control devices ? Improved start-up techniques Results in…
  12. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 12
    Improved conformance allows longer horizontal wells Longer horizontal wells drive efficiencies ? Improved conformance allows us to drill longer wells and capture a larger drainage area ? fewer wells and surface facilities…
  13. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 13
    Redesigned well pads drive cost improvements ? Improvements provide sustainable reduction in F&D RedesignedTransactionwell padisfullyatChristinafinanced Lake Improved modular and scalable design for well pairs and ? Materially…
  14. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 14
    Foster Creek estimated capital savings of $500 million Before: After: ? 18 pads ? 8 pads ? 120 wells ? 66 wells ? ~$1.1 billion ? ~$600 million ? 200 MMbbl recoverable ? 220 MMbbl recoverable…
  15. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 15
    Christina Lake estimated capital savings of $800 million Before: After: ? 19 pads ? 13 pads ? 213 wells ? 105 wells ? ~$1.6 billion ? ~$800 million ? 310 MMbbl recoverable ? 310 MMbbl recoverable…
  16. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 16
    SOR reflects resource quality and execution Reinforcing our position as a leader in SAGD Production Portfolio-weighted (Mbbls/d) SOR 400 6.0 5.1…
  17. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 17
    Demonstrating top quartile oil sands operating costs Q3 2017 oil sands operating costs per barrel Operating costs ($/bbl) $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 CVE CVE Christina Lake Foster…
  18. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 18
    Christina Lake overview Christina Lake production history Mbbls/d 225 200 Optimization Phase…
  19. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 19
    Phase G builds on Christina Lake success ? Best-in-class oil sands project ? Industry-leading steam-oil ratio of 1.8 Expected go-forward capital efficiency of ? $13,000 - $14,000/bbl/d (was $16,000 - $18,000/bbl/d) ?…
  20. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 20
    Foster Creek overview Foster Creek production history Mbbls/d 175 Phase 150 G Phase 125 F 100 Phase D,E 75 Phase C 50 Phase Phase B 25…
  21. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 21
    Solvents expected to create value and reduce emissions intensity CSAP Potential benefits of solvents SAGD ? Decreases SOR by ~30% - 35% ? Increases individual well production rates up to 10% ? Increases growth capital 15 -…
  22. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 22
    Deep Basin provides second growth platform Overview of Deep Basin Deep Basin summary statistics ? One of the largest Deep Basin land positions ? Three core operating areas: Elmworth-Wapiti,…
  23. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 23
    Deep Basin 2017-2018 development program ? Demonstrating high-quality resource and inventory across core areas ? Evaluating development plans to inform future infrastructure decisions ? 2017-2018 winter drilling showing…
  24. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 24
    Deep Basin results exceeding expectations ? 11 wells drilled and expected on-stream by end of Q1 2018 Elmworth / Wapiti ? 3 more wells to rig release in Q1 2018 ? Pipestone Montney Stacking / Spacing pilot and Lower Montney…
  25. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 25
    No near-term takeaway constraints Asset overview Deep Basin infrastructure map ? ~1.4 BCF/d of net natural gas processing capacity and significant associated gathering infrastructure ? Infrastructure footprint spans the Deep…
  26. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 26
    Driving efficiencies in Deep Basin operating costs Q3 2017 operating costs for Deep Basin & Montney peers ($/BOE) (% gas) $20.00 100% Operating costs % Natural gas $18.00 $16.00 80% $14.00 $12.00 60% $10.00…
  27. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 27
    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…
  28. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 28
    Focus on high quality and low risk locations Drilling plans through 2018 focused on development and appraisal 2018 drilling Q1 Q2 Q3 Q4 Elmworth / Wapiti Wapiti Falher 4 wells Kakwa Falher 6…
  29. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 29
  30. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 30
    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…
  31. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 31
    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%…
  32. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 32
    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 ? 4 wells…
  33. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 33
    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…
  34. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 34
    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…
  35. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 35
    Takeaway capacity provides certainty ? Optimizing takeaway capacity to provide flexibility Cenovus has no near term takeaway capacity issues ? West Coast: Trans Mountain ? US Gulf Coast: Enbridge USGC/Flanagan South ?…
  36. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 36
    Deep Basin takeaway capacity and marketing Potential for growth and synergies with oil sands ? Current firm receipt capacity exceeds forecast production levels ? sufficient transportation via committed capacity and system…
  37. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 37
    Hedging summary Current hedge positions for 2018 Hedges at December 31, 2017 Terms Volumes Average price Crude ? Brent Fixed Price January ? June 60,000 bbls/d US$53.34/bbl Crude ? WTI Fixed Price January ? June 150,000…
  38. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 38
    Refining capacity mitigates heavy oil differentials Refinery complexity drives margins ? Refining assets help to mitigate exposure to wider light/heavy differentials ? Approximately 25% of total blended heavy oil volumes are…
  39. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 39
    Bruderheim provides strategic optionality ? Improving margin through development opportunities Long-term and low-cost optionality ? Easy to expand quickly with minimal capital ? Strategic location provides optionality…
  40. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 40
    Refining operating margin sensitivities Refining operating margin sensitivities 2018F Refining operating margin net (LIFO basis) US$ million $1,250 $1,000 $750 L/H diff US$20/bbl US$15/bbl…
  41. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 41
    Creating value through social and governance performance Committed to good governance ? SER Committee of the Board provides oversight of environment and ? sustainability performance Enterprise Risk Management program, practices…
  42. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 42
    Leading environmental performance ? Cenovus?s direct oil sands GHG emissions intensity is down 35% since 2004 and 40%* below industry average ? New well design & start-up procedures ? sub-surface design, longer horizontals…
  43. March 2018 Investor 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 ?…
  44. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 44
    Supplemental terms of the ConocoPhillips? transaction Contingent payment terms ? Based on a 5-year time horizon, with a threshold price of $52.00/bbl Western Canadian Select (?WCS?) ? Calculation based on $6.0 million per…
  45. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 45
  46. March 2018 Investor Presentation – Cenovus Energy Inc. – slide 46
    REFINING & MARKETING Capital expenditures Operating costs ($ millions) ($/bbl) Refining (3) 180 - 200 8.00 - 9.00 Marketing & transportation 0 - 10 CORPORATE Corporate & other expenditures ($ millions) 100 - 120 Upstream…

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