Ovintiv Inc. (de) · NYSE:OVV
Ovintiv Inc. (de) — Investor Presentation (January 2020)
41 slides from Ovintiv Inc. (de)'s investor presentation, Jan 29, 2020
Slide 1: Anadarko Basin – Operational leader with the Ovintiv Edge
Exhibit 99.2 TM Anadarko Basin – Operational leader with the Ovintiv Edge January 29 – 30, 2020Exhibit 99.2 TM Anadarko Basin – Operational leader with the Ovintiv Edge January 29 – 30, 2020
Slide 2: We are Ovintiv
2 We are Ovintiv2 We are Ovintiv
Slide 3: We are Ovintiv
3 We are Ovintiv Leading crude & Deep World Class condensate Multi-Basin Operator producer Resource TM To make modern life possible for all. Track Record of Socially Ticker Significant FCF & Innovative Responsible NYSE: OVV Returns TSX: OVV3 We are Ovintiv Leading crude & Deep World Class condensate
Slide 4: Demonstrated Excellence
WE ARE OVINTIV 4 Demonstrated Excellence Goal Metric Details • Effective integration of NFX acquisition, “one culture” $200 MM G&A Synergies Annualized G&A synergies • >1.5x original target of $125 MM P • Reduced STACK D&C ~25% vs. legacy costs of $7.9 MM / well STACK D&C $6.0 MM STACK D&C • Recent
Slide 5: Strong 2019 Performance
WE ARE OVINTIV 5 Strong 2019 Performance Proforma Guidance PF Excluding Capex Results 2 Original Current Results Dispositions Midpoint of guidance $2.8B Midpoint Low High FY19 FY18 FY19 (YoY) Ŧ FY19 Upstream Free Cash Flow Total Liquids 310 312 316 317 282 315 Mbbls/d Crude & condensate 225 (+9%) 20
Slide 6: Strong Anadarko Basin Production
WE ARE OVINTIV 6 Strong Anadarko Basin Production • Significant YoY volume growth in the Anadarko o Oil and condensate cut and production flat in 2H19 despite reduction in rig count – 124 net wells on production in 2019 +18% Ŧ o >25% of FY19 upstream FCF generated from Anadarko Basin Proforma Crude
Slide 7: Why the Anadarko Works for Ovintiv
WE ARE OVINTIV 7 Why the Anadarko Works for Ovintiv 1 World Class Operator STACK IRRs Compete with All Basins P o Quality multi-basin assets with scale o Proven operational expertise ~50% o Top tier ESG performance Targeted, Contiguous Acreage Position P o Grass roots leasing campaign – low royaltie
Slide 8: World Class Operator
8 World Class Operator 8 World Class Operator
Slide 9: Multi-Basin Scale Critical for Through Cycle Performance
WORLD CLASS OPERATOR 9 Multi-Basin Scale Critical for Through Cycle Performance Substantial operational scale 1 589 MBOE/d PF FY19 (~55% liquids) ~425 gross operated wells drilled in FY19 Montney 2 ~2 million net acres In top North American Basins Bakken 3 >2 BBOE PF Proved Reserves Anadarko ~55% li
Slide 10: Ovintiv: A Leading Crude & Condensate Producer
WORLD CLASS OPERATOR 10 Ovintiv: A Leading Crude & Condensate Producer 2 3Q19 Liquids Production (Mbbls/d) • Quality multi-basin portfolio drives performance Peer 1 OVV 329 (>70% crude + condensate) • Scale provides flexibility across basins and commodities Peer 2 Avg crude + condensate Peer 3 API o
Slide 11: The Ovintiv Edge
WORLD CLASS OPERATOR 11 The Ovintiv Edge • Leveraging multi-basin scale and technical expertise to unlock value o Substantial experience with >4,300 horizontal wells drilled across North America over the last 10-years o Traded for >1,000 wells of proprietary data, underpinning cross-basin understand
Slide 12: Industry Leading ESG Performance
WORLD CLASS OPERATOR 12 Industry Leading ESG Performance th Environmental Performance 6 Consecutive Safest Year Ever Proven Safety Results TRIF Methane Intensity 2018 Water Use 0.43 0.44 ~45% # 0.34 0.30 0.30 0.28 1 0.22 1 0.21 vs. 23 AXPC peers in the U.S. Alternative Fresh 2014 2015 2016 2017 2018
Slide 13: Targeted, Contiguous Acreage Position
13 Targeted, Contiguous Acreage Position13 Targeted, Contiguous Acreage Position
Slide 14: What We Saw in the Anadarko
TARGETED, CONTIGUOUS ACREAGE POSITION 14 What We Saw in the Anadarko Purchase Price: $K / Net Acre • Attractive basin entry supports full cycle corporate returns Permian 1 $76 2018 Permian 2 $55 2018 • Multiple stacked targets, contiguous acreage position Permian 3 $33 2018 Permian 4 $24 2018 • Oppo
Slide 15: Primed for Full-Field Development
TARGETED, CONTIGUOUS ACREAGE POSITION 15 Primed for Full-Field Development 1 Anadarko Basin Acreage • >385k net acres in the Anadarko Basin sourced through grass roots leasing STACK o Clear acreage cut off lines to the north and east of STACK footprint define “the core” 286k net acres • Thoughtful H
Slide 16: Advantaged Midstream & Marketing Position
TARGETED, CONTIGUOUS ACREAGE POSITION 16 Advantaged Midstream & Marketing Position Advantaged Proximity to Key Pricing Hubs • Substantial in-place midstream infrastructure o Diversified, well established midstream providers Conway NGL Price Hub o 90% of STACK production connected to oil pipeline inf
Slide 17: Quality Reservoir
17 Quality Reservoir17 Quality Reservoir
Slide 18: Large Contiguous Reservoir Underpins Acreage
QUALITY RESERV OIR 18 Large Contiguous Reservoir Underpins Acreage 1 Anadarko Basin Acreage • World class Woodford source rock with fully charged Meramec o Thick hydrocarbon window with multiple stacked targets STACK o Hydrocarbon recoverability driven by geologic deposition and pressure windows 286
Slide 19: Anadarko Basin Regional Geology
QUALITY RESERV OIR 19 Anadarko Basin Regional Geology 1 Anadarko Basin Acreage • Acreage focused in the core of the well delineated black oil window • Well established subsurface understanding o Significant core & logging data drive development certainty o Full 3D seismic coverage provides operation
Slide 20: STACK + Top Tier Operator = Premier Resource Play
QUALITY RESERV OIR 20 STACK + Top Tier Operator = Premier Resource Play OVV’s Acreage • Building the STACK acreage position Key Characteristics o Targeted for pressure, oil cut and thickness o Geological variables tie directly to oil well deliverability Core STACK Black Oil Window Reservoir Pressure
Slide 21: Ovintiv Edge
21 Ovintiv Edge21 Ovintiv Edge
Slide 22: The Ovintiv Edge
OVINTIV EDGE 22 The Ovintiv Edge Supply Chain Completions $95 MM savings in the Anadarko as a +150% operational pumping hours (4Q19 result of supply chain initiatives vs FY18 average) Drilling Well Performance ~20% reduction in spud to rig release Advanced well monitoring leading to strong base prod
Slide 23: Differentiated Supply Chain Management
OVINTIV EDGE 23 Differentiated Supply Chain Management 1 • OVV’s advantaged supply chain management approach $95 MM Anadarko Commercial Savings o Leverage multi-basin market knowledge Sand o Unbundle key services to access low-cost, best performing suppliers $35 MM o Flexible, transferable, “best va
Slide 24: STACK Drilling Innovation
OVINTIV EDGE 24 STACK Drilling Innovation 1 OVV Leading STACK Driller (Ft/day) • Top-Tier operator in Anadarko 2,208 2,103 o Recent 9-day SPUD to RR in STACK: 1,999 1,747 1,696 1,590 – 60% faster rate of penetration in lateral vs best in class • Performance driven culture 988 o De-risking cubes thro
Slide 25: Execution Rapidly Improved Anadarko Returns
OVINTIV EDGE 25 Execution Rapidly Improved Anadarko Returns • Completion operation overhauled day one to maximize efficiency o Pump rate increased from 80 à 100+ Bbls/min o Significant frac efficiency improvement – Increased pumping hours ~2.5x FY18 à 4Q19 o Optimized drill out procedure saving ~$20
Slide 26: Redesigned Production Facilities
OVINTIV EDGE 26 Redesigned Production Facilities • Sustainable wellsite cost reductions o Standardized design leads to reduced engineering and equipment costs o New design allows for pre-fabrication and lower install costs o Existing pipeline infrastructure ensures minimal tie in costs • Increased s
Slide 27: Base Production Optimization
OVINTIV EDGE 27 Base Production Optimization 35 Base Decline - Anadarko Basin Oil • Cross-basin collaboration unlocking value o Optimized artificial lift performance Exceeded mid-year projection by ~1,000 30 Bopd over final 5 months rd –3 party high pressure gas lift – Created critical rate gas lift
Slide 28: Cycle Times Matter
OVINTIV EDGE 28 Cycle Times Matter 1 Cross-Basin Learnings = Cycle Time Reduction (Days) • Applying cross-basin learnings faster than peers is a true competitive 1Q – 3Q19 advantage 4Q19 146 o Leading edge development practices applied across all assets 1Q19 vs 4Q19 o Utilizing real-time performance
Slide 29: Strong Returns
29 Strong Returns29 Strong Returns
Slide 30: Consistent STACK Well Performance
STRONG RETUR N S 30 Consistent STACK Well Performance Core STACK Black Oil Window 2 Generating ~50% IRR with <2-yr payout Lower OOIP Higher OOIP Increasing BOE & Gas Cut Increasing Oil Cut & Lower Cost Consistent results at development spacing D&C 2-yr Oil & C5+ Cum 2-yr BOE Cum 2 Fluid Window ATAX
Slide 31: Each Cube is a Unique Development
STRONG ECONOMICS 31 Each Cube is a Unique Development 6-Well Cube Meramec Development Case Study 100% • Customize cube design to maximize value Maximizing value and returns Ovintiv D&C = o Specific geologic variables (i.e. reservoir thickness, depth) $6.0 MM 90% o Parent well performance data (drill
Slide 32: STACK Return Sensitivities
STRONG ECONOMICS 32 STACK Return Sensitivities Pacesetter performance better than OVV Well Positioned vs. In-Basin Peers this today 60% +10% 1 +15% 50% +7% +3% 25% Anadarko Peers Favorable Midstream Lower Royalties: 19% Capital Efficiencies: Ovintiv Further $500k Capital Future OVV Returns Contracts
Slide 33: Substantial Running Room
STRONG ECONOMICS 33 Substantial Running Room STACK ~200 Undeveloped Operated DSUs SCOOP ~70 Undeveloped Operated DSUs • Future development focused in black oil region • Immediately applying STACK learnings to SCOOP o Cost savings & consistent wells driving economics o 4Q19 SCOOP cube realized 15% sa
Slide 34: Why the Anadarko Works for Ovintiv
KEY TAKEAWAY S 34 Why the Anadarko Works for Ovintiv 1 STACK Returns Compete with All Basins ~50% World Class Operator P <25% Targeted, Contiguous Acreage Position P $30 / Bbl WTI Breakeven Quality Reservoir P Legacy NFX Costs Current OVV Costs $7.9 MM D&C / well $6.0 MM D&C / well Ovintiv Edge P ~2
Slide 35: We Are Ovintiv
KEY TAKEAWAY S 35 We Are Ovintiv Financial Ability to manage volatility through the cycle Free cash flow generation and return of capital to shareholders Stable capital structure & improving leverage Operational Sustainable liquids growth from multi-basin assets of scale Deep inventory of short-cycl
Slide 36: Future Oriented Information
36 Future Oriented Information This presentation contains forward-looking statements or information (collectively, “FLS”) within the meaning of applicable securities legislation, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
Slide 37: Advisory Regarding Oil & Gas Information
37 Advisory Regarding Oil & Gas Information All reserves estimates in this presentation are effective as of December 31, 2018, prepared by qualified reserves evaluators in accordance with procedures and standards contained in the Canadian Oil and Gas Evaluation ( COGE ) Handbook, National Instrument
Slide 38: Ovintiv
sf Ovintiv ” Kovintiv
Slide 39: Appendix
39 Appendix39 Appendix
Slide 40: Anadarko Basin Play Details
40 Anadarko Basin Play Details STACK SCOOP Black Oil Springer Woodford IRRs ($55 / $2.50 flat) 40% – 60% 40% – 60% 40% – 60% EUR (MMboe) 0.9 – 1.2 1.1 – 1.3 0.8 – 1.1 D&C costs ($ MM) $5.0 – $6.0 $9.0 – $10 $5.4 – $6.2 1 Remaining Operated DSUs (gross) 192 14 57 WI / NRI (%) 75% / 61% 59% / 48% 63%
Slide 41: Reconciliation of FY19 Guidance to Reportable
41 Reconciliation of FY19 Guidance to Reportable Reportable Impact of Newfield Jan 1 FY 2019 Guidance Guidance – Feb 13, 2019 Proforma Total Liquids (Mbbls/d) 297 – 301 15 312 – 316 Natural Gas (MMcf/d) 1,560 – 1,575 55 1,615 – 1,630 Total Production (MBOE/d) 556 – 566 24 580 – 590 Capital Investmen