Cenovus Energy Inc. · TSX:CVE
Cenovus Energy — Corporate Update (December 2016)
19 slides from Cenovus Energy's corporate update, Dec 8, 2016
Slide 1: 2017 budget overview
2017 budget overview 2017 budget December 8, 2016
Slide 2: Advisory
Advisory Forward-looking information. This presentation contains certain forward-looking statements and other information (collectively “forward-looking information”) about Cenovus's current expectations, estimates and projections, made in light of our experience and perception of historical trends.
Slide 3: Advisory
Advisory Non-GAAP measures. This presentation contains references to non-GAAP measures as follows: • Operating cash flow is defined as revenues, less purchased product, transportation and blending, operating expenses, production and mineral taxes plus realized gains, less realized losses on risk man
Slide 4: Oil sands drive 14% liquids growth
Oil sands drive 14% liquids growth 2017 budget overview • Increasing oil production by 14% • Holding the line on per barrel oil operating costs • Resuming construction of Christina Lake phase G • Allocating growth capital to attractive conventional opportunities at Palliser • Maintaining financial s
Slide 5: 2017 budget captures cost improvements
2017 budget captures cost improvements Total capital guidance of $1.2 – $1.4 billion Capital highlights 2017F 2016F % change • 70% sustaining and maintenance; 30% growth and other Total capital ($ billions) $1.2 – $1.4 $1.0 – $1.1 24% • $115 million for Christina Lake phase G expansion • $160 millio
Slide 6: Clear capital allocation priorities
Clear capital allocation priorities Safe & reliable Sustainable returns Value added Discretionary operations to shareholders growth capital financial discipline | cost leadership | focused innovation Portfolio optimization, Maintenance & oil sands Dividends must be advancing emerging Christina Lake
Slide 7: Christina Lake budget highlights
Christina Lake budget highlights 2017F capital: $300 – $350 million • $115 million for phase G expansion; resuming construction in H1 2017 2017F production: 96 – 102 Mbbls/d • Year-over-year growth of 25% • Phase F expected to continue ramping up through 2017 Top-tier reservoir • 2017F SOR: 1.8x – 2
Slide 8: Phase G builds on Christina Lake success
Phase G builds on Christina Lake success Best-in-class oil sands project Christina Lake phase G 100% gross • Proven track record in project development Project oil capacity (bbls/d) 50,000 • Industry-leading steam-oil ratio Steam-oil ratio 1.8 – 2.2 • Low capital efficiencies Capital spent to date (
Slide 9: Foster Creek budget highlights
Foster Creek budget highlights 2017F capital: $325 – $375 million • Constructing sustaining pads for 2018-2019 2017F production: 76 – 82 Mbbls/d • Year-over-year growth of 14% • Phase G expected to continue ramping up through 2017 2017F SOR: 2.6x – 3.0x 2017F non-fuel opex: $7.75 – $9.25/bbl 2017F t
Slide 10: Innovation drives sustaining capital reductions
Innovation drives sustaining capital reductions Examples of expected efficiency gains: Structural changes reduce sustaining costs • Quicker drilling times: up to 30% faster Sustaining capital ($/bbl) $15.00 • Redesigned well pads: 35% – 50% reduction in size and costs $14.00 • Longer reach horizonta
Slide 11: Conventional portfolio generates free cash flow
Conventional portfolio generates free cash flow Strategy remains unchanged • Free cash flow used to fund oil sands growth opportunities • Flexible capital investment to respond to Pelican Lake commodity price volatility Four key properties • Palliser block – tight oil & natural gas Alberta Saskatche
Slide 12: Conventional budget focused on Palliser
Conventional budget focused on Palliser 2017F conventional capital: $285 – $340 million Targeted growth at Palliser • $160 million growth capital directed to Palliser block Total capital ($MM) Operating cash flow1 ($MM) • disciplined program of 50 horizontal development wells and $200 $200 60 strati
Slide 13: Palliser block is an attractive opportunity
Palliser block is an attractive opportunity Taking a disciplined approach to development Unrisked location inventory • Low-cost and short-cycle time growth opportunities • Over 1,200 sections of leased and available Mannville oil lands 20% Ellerslie • 700 unrisked Mannville horizontal oil locations
Slide 14: Oil sands drive 14% liquids growth
Oil sands drive 14% liquids growth 2017 budget overview • Increasing oil production by 14% • Holding the line on per-barrel oil operating costs • Resuming construction of Christina Lake phase G • Allocating growth capital to attractive conventional opportunities at Palliser • Maintaining financial s
Slide 15: Supplemental information
Supplemental information ENERGY
Slide 16: Hedging summary
Hedging summary Current crude oil hedges at December 7, 2016 bbls/d C$/bbl 100,000 $75.00 H2 2016 average H1 2017 average H2 2017 average H1 2018 32% 30% 26% $70.00 75,000 $65.00 50,000 $60.00 25,000 $55.00 0 $50.00 H2 2016 H1 2017 H2 2017 H1 2018 Swap volume (bbls/d) Collar volume (bbls/d) US$ hedg
Slide 17: Operating cash flow sensitivities
Operating cash flow sensitivities 2017F operating cash flow sensitivities Independent base case sensitivities ($ millions) Increase Decrease Crude oil (WTI) – US$10.00 change $650 ($660) Light-heavy differential (WTI-WCS) – US$5.00 change ($350) $340 Chicago 3-2-1 crack spread – US$1.00 change $95 (
Slide 18: Refining operating cash flow sensitivities
Refining operating cash flow sensitivities Refining operating cash flow sensitivities Refining operating cash flow net (LIFO basis) US$ million $1,250 $1,000 L/H diff $750 US$20/bbl US$15/bbl $500 US$10/bbl $250 $0 -$250 $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 Chicago crack spread - US$/bbl U$1 ch
Slide 19: Investor relations contacts
Investor relations contacts Kam Sandhar Vice-President, Investor Relations & Corporate Development kam.sandhar@cenovus.com 403.766.5883 Steve Murray Senior Analyst, Investor Relations steven.murray@cenovus.com 403.766.3382 Michelle Cheyne Analyst, Investor Relations michelle.cheyne@cenovus.com 403.7