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February 2019 Corporate Update – Cenovus Energy Inc.

Cenovus Energy Inc. · Feb 13, 2019 · 47 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. February 2019 Corporate Update – Cenovus Energy Inc. – slide 1
    Building positive momentum February 2019
  2. February 2019 Corporate Update – Cenovus Energy Inc. – slide 2
    $19 billion enterprise value 486 MBOE/d total production 241 Mbbls/d refining capacity $5.3 billion liquidity 39 year reserve life index 825 Mbbls/d regulatory approved capacity Cenovus at a glance Note: Values are…
  3. February 2019 Corporate Update – Cenovus Energy Inc. – slide 3
    Positioned to increase shareholder value • Best-in-class assets and knowledge in SAGD • Industry-leading capital efficiencies • Regulatory approvals in place • Streamlining the Deep Basin Leveraging a focused asset base Realizing…
  4. February 2019 Corporate Update – Cenovus Energy Inc. – slide 4
    Disciplined capital allocation priorities Sustaining capital Christina Lake phase G completion Increasing total shareholder return Note: Targeting net debt to adjusted EBITDA < 2.0x at low cycle prices (US$45/bbl WTI and C$43/bbl).…
  5. February 2019 Corporate Update – Cenovus Energy Inc. – slide 5
    2019 budget reflects capital discipline 2019 budget highlights Production volumes 2018 Actual 2019F Foster Creek (Mbbls/d) 162 162 - 170 Christina Lake (Mbbls/d) 201 215 - 225 Deep Basin (MBOE/d) 120 95 - 105 Operating costs 2018…
  6. February 2019 Corporate Update – Cenovus Energy Inc. – slide 6
    Canadian oil differentials expected to tighten in 2019 Source: Expected pipeline in-service dates reflect most recent publicly stated dates. Liquids supply curve as per 2018 CAPP forecast. See Advisory. Supply currently in excess of…
  7. February 2019 Corporate Update – Cenovus Energy Inc. – slide 7
    Resilience at low cycle prices • Capable of covering sustaining capital requirements and current dividend at low cycle prices: • US$45/bbl WTI, C$43/bbl WCS • sustaining capex: approximately $1.1 billion • current dividend: $246…
  8. February 2019 Corporate Update – Cenovus Energy Inc. – slide 8
    Managing the balance sheet for low cycle prices Note: Liquidity position as at December 31, 2018 reflecting partial redemption of 2019 bond (US$800 million) and repurchase of unsecured notes (US$76 million). Additional repurchase of…
  9. February 2019 Corporate Update – Cenovus Energy Inc. – slide 9
    • Largest SAGD producer with best-in-class assets • oil sands sustaining…
  10. February 2019 Corporate Update – Cenovus Energy Inc. – slide 10
    Best-in-class oil sands assets Note: Values are approximate. Forecasted production based on the midpoint of December 10, 2018 guidance, which does not include the expected impacts of mandatory curtailment. Proved plus probable bitumen…
  11. February 2019 Corporate Update – Cenovus Energy Inc. – slide 11
    Oil sands leader • Expected to improve reservoir performance • Anticipated to reduce GHG emissions intensity Largest, most efficient producer • Largest SAGD producer • Lowest SOR • Most regulatory approved oil sands productive…
  12. February 2019 Corporate Update – Cenovus Energy Inc. – slide 12
    • Best-in-class producing assets with unmatched scale of operation • Concentrated resources with significant reserve life • Safely executed 14 major oil sands capacity expansions • SOR reflects resource quality and execution • Lower…
  13. February 2019 Corporate Update – Cenovus Energy Inc. – slide 13
    Industry-leading capital efficiencies drive future growth Note: Cenovus has flexibility on start-up and will take into consideration whether mandated curtailments have been lifted and if there is sustained improvement in market access…
  14. February 2019 Corporate Update – Cenovus Energy Inc. – slide 14
    • ~ 70% reduction in oil sands sustaining capital costs since 2014 • Design and productivity improvements are expected to be sustainable • ~ 45% reduction to oil sands operating costs since 2014 • Non-fuel costs decreasing • Natural…
  15. February 2019 Corporate Update – Cenovus Energy Inc. – slide 15
    Track record of execution with significant running room Note: Cenovus has flexibility on start-up of Christina Lake phase G and will take into consideration whether mandated curtailments have been lifted and if there is sustained…
  16. February 2019 Corporate Update – Cenovus Energy Inc. – slide 16
    Our GHG emissions performance • Among the lowest steam to oil ratios in the industry • Plans to achieve additional reductions in emissions intensity through: • advancing solvents • applying more cogeneration • focusing on energy…
  17. February 2019 Corporate Update – Cenovus Energy Inc. – slide 17
    Advancing our cost and carbon leadership through technology Improving reservoir performance Reducing costs and improving margins Lowering emissions
  18. February 2019 Corporate Update – Cenovus Energy Inc. – slide 18
    Solvents expected to create value and reduce emissions intensity Note: Expectations of solvent are associated with conventional solvent aided process (CSAP). • Decreases SOR by ~30% - 35% • Increases individual well production rates…
  19. February 2019 Corporate Update – Cenovus Energy Inc. – slide 19
    Significant potential in the Deep Basin Note: Values are approximate. Forecasted production based on the midpoint of December 10, 2018 guidance, which does not include the expected impacts of mandatory curtailment. Capacity of 1.2 BCF/d…
  20. February 2019 Corporate Update – Cenovus Energy Inc. – slide 20
    Deep Basin provides short-cycle opportunities • Three core operating areas across approximately 2.8 million net acres • 2019F production: 95 – 105 MBOE/d (26% liquids; 17% decline rate) • Reduced capital investment in 2019 of $50 – 75…
  21. February 2019 Corporate Update – Cenovus Energy Inc. – slide 21
    Deep Basin has low decline, liquids rich production 2019F production 2019F decline rate 0 50 100 150 200 250 300 TOU VII ARX CVE PEY MBOE/d • 17% decline rate is a competitive advantage • Reduces sustaining capital…
  22. February 2019 Corporate Update – Cenovus Energy Inc. – slide 22
    Additional development upside at Marten Hills Note: See Advisory. Cenovus Deep Basin Lands Cenovus Oil Sands Lands Athabasca Oil Sands Region Cenovus Marten Hills Lands 2019 activity focused on further appraisal across land base…
  23. February 2019 Corporate Update – Cenovus Energy Inc. – slide 23
    Integration across the value chain improves margin Heavy processing capacity Current exAlberta pipeline commitments Crude by rail capacity 128 Mbbls/d 118 Mbbls/d 100 Mbbls/d Note: Values are approximate, net to Cenovus,…
  24. February 2019 Corporate Update – Cenovus Energy Inc. – slide 24
    Benefiting from refinery location and processing capacity Note: Cumulative $3.7 billion in free funds flow as at December 31, 2018. Capacities are gross values. Cenovus is a 50 percent partner in the Wood River and Borger refineries,…
  25. February 2019 Corporate Update – Cenovus Energy Inc. – slide 25
    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…
  26. February 2019 Corporate Update – Cenovus Energy Inc. – slide 26
    Shifting destination sales away from Canadian pricing Mitigating our exposure to wider heavy differentials Volumes (Mbbls/d) >95% Note: Options are based on total capacity or commitment, net to Cenovus, and are subject to market…
  27. February 2019 Corporate Update – Cenovus Energy Inc. – slide 27
    Pipelines are core to market access strategy • Taking a portfolio approach to maximize the value of every barrel • Secured pipeline access to key markets outside of Alberta • Multiple pipelines provide diversification of markets and…
  28. February 2019 Corporate Update – Cenovus Energy Inc. – slide 28
    Crude by rail provides structural support and optionality Heavy oil differentials drive crude by rail economics Bruderheim provides strategic advantage MEG upgrading pilot Manifest operations area Unit train operation Rail…
  29. February 2019 Corporate Update – Cenovus Energy Inc. – slide 29
    Creating value through corporate responsibility • SER Committee of the Board provides oversight of environment and sustainability performance • Enterprise Risk Management program, practices, and policy help ensure active and effective…
  30. February 2019 Corporate Update – Cenovus Energy Inc. – slide 30
    Supplemental
  31. February 2019 Corporate Update – Cenovus Energy Inc. – slide 31
    Foster Creek overview Note: Production is shown before royalties on a gross basis. CSOR is prior to voluntary curtailment in 2018. Average production per well excludes voluntary curtailment periods in 2018. 2019F production based on the…
  32. February 2019 Corporate Update – Cenovus Energy Inc. – slide 32
    Christina Lake overview Note: Production is shown before royalties on a gross basis. CSOR is prior to voluntary curtailment in 2018. Average production per well excludes voluntary curtailment periods in 2018. 2019F production based on…
  33. February 2019 Corporate Update – Cenovus Energy Inc. – slide 33
    New design improves well conformance • Superior start-up and steam circulation methods • Advanced sub-surface equipment and design • High pressure ramp up 32 2011 4D, or time-lapse seismic, can be acquired to determine changes in…
  34. February 2019 Corporate Update – Cenovus Energy Inc. – slide 34
    Improved start-up procedures on new pads Improved performance Foster Creek well performance improving Recovery factor • Longer reach horizontal well pairs • Drilling improvements • Inflow/outflow control devices • Improved start-up…
  35. February 2019 Corporate Update – Cenovus Energy Inc. – slide 35
    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 and capture a larger drainage area • fewer wells and surface facilities (~25%…
  36. February 2019 Corporate Update – Cenovus Energy Inc. – slide 36
    Redesigned well pads drive cost improvements Sustainable reductions in oil sands capital Redesigned well pad at Christina Lake Transaction is fully financed • Improved modular and scalable design for well pairs and pads • Materially…
  37. February 2019 Corporate Update – Cenovus Energy Inc. – slide 37
    Foster Creek estimated capital savings of $500 million After: • 8 pads • 66 wells • ~$600 million • 220 MMbbls recoverable Before: • 18 pads • 120 wells • ~$1.1 billion • 200 MMbbls recoverable Improved conformance, longer…
  38. February 2019 Corporate Update – Cenovus Energy Inc. – slide 38
    Christina Lake estimated capital savings of $800 million Before: • 19 pads • 213 wells • ~$1.6 billion • 310 MMbbls recoverable After: • 13 pads • 105 wells • ~$800 million • 310 MMbbls recoverable Improved conformance, longer…
  39. February 2019 Corporate Update – Cenovus Energy Inc. – slide 39
    Foster Creek and Christina Lake are post-payout projects • Royalty calculation is annualized using the greater of gross revenues or net profits multiplied by applicable royalty rates • Gross revenues are a function of bitumen sales…
  40. February 2019 Corporate Update – Cenovus Energy Inc. – slide 40
    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…
  41. February 2019 Corporate Update – Cenovus Energy Inc. – slide 41
    Wood River Borger Heavy Medium sour Light 40 Typical crude slate and product yield Crude feedstock Refined products Note: Our realized crack spreads are affected by many other factors such as the variety of crude oil feedstock,…
  42. February 2019 Corporate Update – Cenovus Energy Inc. – slide 42
    Refining operating margin sensitivities Note: Based on pricing as per December 10, 2018 guidance document for 2019 as a basis, and assumes no unplanned downtime or external disruptions. RINs assumed at US$0.32 cpg. $0 $250 $500 $750…
  43. February 2019 Corporate Update – Cenovus Energy Inc. – slide 43
    Hedging summary Current hedge positions for 2019 Hedges at December 31, 2018 Terms Volumes Average price Crude – WTI Collars January – December 19,000 bbls/d US$50.00 – US$62.08/bbl
  44. February 2019 Corporate Update – Cenovus Energy Inc. – slide 44
    ^ ^ Steepbank East McMurray Telephone Lake Foster Creek Proper Narrows Lake West Kirby Winefred Lake Christina Lake Proper BOREALIS REGION CHRISTINA LAKE REGION FOSTER CREEK REGION Hardy Leismer Alberta S askatche w an…
  45. February 2019 Corporate Update – Cenovus Energy Inc. – slide 45
    ^ ^ Steepbank East McMurray Telephone Lake Foster Creek Proper Narrows Lake West Kirby Winefred Lake Christina Lake Proper BOREALIS REGION CHRISTINA LAKE REGION FOSTER CREEK REGION Hardy Leismer Alberta S askatche w an…
  46. February 2019 Corporate Update – Cenovus Energy Inc. – slide 46
    2019 Corporate Guidance - C$, before royalties UPSTREAM OIL SANDS Foster Creek 162 - 170 250 - 300 Fuel 1.50 - 2.00 15 - 20 2.6 - 3.0 Non-fuel 6.50 - 7.50 Total 8.00 - 9.50 Christina Lake 215 - 225 425 - 475 Fuel 1.50 - 2.00 8 - 13…
  47. February 2019 Corporate Update – Cenovus Energy Inc. – slide 47
    Foster Creek 162 - 170 250 - 300 Fuel 1.50 - 2.00 15 - 20 2.6 - 3.0 Non-fuel 6.50 - 7.50 Total 8.00 - 9.50 Christina Lake 215 - 225 425 - 475 Fuel 1.50 - 2.00 8 - 13 1.8 - 2.2 Non-fuel 4.50 - 5.50 Total 6.00 - 7.50 Narrows Lake - -…

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