Cenovus Energy Inc. · TSX:CVE
Cenovus Energy — Investor Presentation (June 2014)
34 slides from Cenovus Energy's investor presentation, June 2014
Slide 1: A different kind of oil sands
A different kind of oil sands June 2014
Slide 2: A different kind of oil sands: strong integrated oil portfolio
A different kind of oil sands Focus on total shareholder return & building net asset value Top-tier oil sands portfolio generates predictable, reliable growth Strong project execution & innovation drives performance Strategic integration & market access enhances cash flow Solid & conservative financ
Slide 3: Continuing to execute our 10-year plan
Continuing to execute our 10-year plan 2014 milestones Grow reserves & contingent resources Anticipate Grand Rapids regulatory approval (previously Q4 2013) Q1 Drill approximately 300 stratigraphic test wells & assess results Progress Narrows Lake phase A engineering, procurement & constructio
Slide 4: Updated bitumen contingent resources
Updated bitumen contingent resources Bitumen best estimate economic contingent resources (Billions of barrels) 2013 2012 2011 2010 Foster Creek 1.4 1.3 0.9 0.8 Christina Lake core & other areas 1.1 1.2 1.1 0.8 Narrows Lake 0.1 0.1 0.4 0.5 Telephone Lake 2.6 2.2 2.1 2.0 Steepbank & East McMurray 2.9
Slide 5: Oil Sands
S hown here is Foster Creek, our largest oil sands project. Since our oil sands resources are deep beneath the surface, none of our projects are mined. Instead, our projects require specialized methods like steam-assisted gravity drainage (SAGD) to drill and pump the oil to the surface. OIL SANDS “I
Slide 6: Advancing oil sands projects
Our manufacturing approach has driven oil sands growth Oil sands production Mbbls/d 250 200 150 100 50 0 Foster Creek Christina Lake Production is shown before royalties on a gross basis. Advancing oil sands projects Expected total Project phase Regulatory status First production target production c
Slide 7: SOR reflects resource quality & execution
SOR reflects resource quality & execution Steam to oil ratio Low SOR means: bbl/bbl 8.0 • Lower capital cost Peer Producing CVE project Emerging CVE project • Lower operating cost 7.0 • Smaller surface footprint 6.0 • Lower energy usage • Lower emissions 5.0 • Less water usage 4.0 3.0 2.0 1.0 0.0 GR
Slide 8: Managing SOR at Foster Creek
Managing SOR at Foster Creek • Optimizing placement of steam Foster Creek historical SOR performance across our wells & pads with 4.0 improved instrumentation • Placing more pads on blow-down, 3.0 transferring steam to new pads • Using Wedge Well™ technology to capture production in areas where 2.0
Slide 9: Well pair conformance optimizes SOR
Well pair conformance optimizes SOR Foster Creek well pad • Once steam chambers coalesce, good well conformance will minimize impact to SOR • Increased Wedge Well™ technology helps capture oil in existing wells with low conformance • bringing on 42 new Wedge Wells™ through 2014 & early 2015 • Steam
Slide 10: Focusing on consistent operations at Foster Creek
Focusing on consistent operations at Foster Creek Daily production Mbbls/d 120 100 80 60 40 20 0 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Production is shown on a gross basis. Christina Lake is a top tier reservoir
Slide 11: Cenovus SAGD is among the lowest supply cost globally
Cenovus SAGD is among the lowest supply cost globally Breakeven US$/bbl 120 175 global oil projects Global average supply cost ~$70 100 Oil sands SAGD projects 80 60 Cenovus supply cost US$35 - $65/bbl 40 20 0 10 20 30 Cumulative peak production MMbbls/d Source: Goldman Sachs, Cenovus. Goldman Sachs
Slide 12: SAGD portfolio provides development opportunity
SAGD portfolio provides development opportunity Foster Creek Christina Lake Narrows Lake Grand Rapids Telephone Lake Working interest 50% 50% 50% 100% 100% Potential size (Mbbls/d gross) 310 310 130 180 300+* 2.1 SAGD Design SOR 2.1 1.7 3.0 - 3.5 2.1 1.6 SAP Land position (net acres) 70,080 28,800 1
Slide 13: Driving innovation in oil sands through technology
Driving innovation in oil sands through technology Technology development drives SAGD performance: • Wedge Well™ technology • Blowdown boiler • Electric submersible pumps • SkyStrat™ drilling rig • Solvent aided process • Dewatering process Wedge Well™ technology optimizes reservoir performance Tech
Slide 14: Solvent aided process at Narrows Lake improves project economics
Solvent aided process at Narrows Lake improves project economics SAP SAGD SAP vs. SAGD: • Decreases SOR by ~30% • Increases full field recovery rates by ~15% • Increases growth capital 10 - 20% • Decreases sustaining capital by ~10% • Reduces non-fuel operating costs by 5 - 10% • Lowers emissions, w
Slide 15: Telephone Lake is another cornerstone asset
Telephone Lake is another cornerstone asset Borealis region Telephone Lake commercial project: • Regulatory approval expected second half 2014 • Expected initial production capacity 90,000 bbls/d (phases A & B) Telephone Lake project area • Project SOR - 2.1 • Expected peak production capacity 300,0
Slide 16: Moving forward with Grand Rapids development
Moving forward with Grand Rapids development Greater Pelican region SAGD pilot update: • Operating since 2011 • Two well pairs currently producing Commercial project: • Received regulatory approval Q1 2014 • Phase A: 8,000 – 10,000 bbls/d Grand Rapids • first steam 2017 • 180,000 bbls/d expected tot
Slide 17: Conventional Oil
Our Weyburn oilfield, located in southern Saskatchewan, has produced for more than 50 years due to technology advances, most recently through the use of CO2 to enhance oil recovery. CONVENTIONAL OIL We expect significant near-term growth in our conventional oil production.
Slide 18: Significant cash flow helps fund oil sands growth
Significant cash flow helps fund oil sands growth Conventional oil & gas: • ~70% fee lands $ millions • >20% IRR 1,000 • Payback less than 3 years 800 • Scalable & flexible capital program 600 • Diversification of product streams 400 Pelican Lake: 200 • Water/polymer flood 0 Weyburn: Conventional oi
Slide 19: Natural gas - a natural hedge with significant cash flow
Natural gas - a natural hedge with significant cash flow $ billion Natural gas: 1.2 Capital Operating cash flow • Significant cash flow with minimal capital 1.0 investment & low operating costs 0.8 • Primarily fee lands 0.6 0.4 • CBM recompletions have strong returns 0.2 • 2014F production ~3.1 MMcf
Slide 20: Refining, Marketing and Transportation
The recently completed coker at our Wood River Refinery in Illinois supports our integration strategy and growth plans. REFINING, MARKETING AND TRANSPORTATION Strategically located in the mid-continent of the United States, these refineries are able to process heavy oil, which has helped generate stro
Slide 21: Expanding margin through market access & integration
Expanding margin through market access & integration Production Alberta pricing Participating in the value chain to Transportation expand margin North American & global crude pricing Refining Global product pricing Integration continues to deliver value & reduce cash flow volatility Wood River Refin
Slide 22: Delivering significant cash flow from the downstream
Delivering significant cash flow from the downstream $ billion 1.5 • Feedstock advantage & heavy processing capacity drive cash flow 1.0 • Minimal annual maintenance capital of $150 - $160 million 0.5 0.0 2009 2010 2011 2012 2013 Capital Operating cash flow ~$1 billion in operating cash flow in exce
Slide 23: Committing to pipeline expansions for market access
Committing to pipeline expansions for market access Current pipeline access: • West Coast: Trans Mountain - 11,500 bbls/d Alberta Adding pipeline commitments: Kitimat Edmonton Hardisty • US Gulf Coast: Enbridge US Gulf Coast access - 75,000 bbls/d Vancouver Montreal Keystone XL - 75,000 bbls/d Saint
Slide 24: Refining operating cash flow sensitivities
Refining operating cash flow sensitivities Refining operating cash flow C$ million L /H diff 2014F budget: 1,600 $40/bbl • Operating cash flow $300 - $700 million* 1,200 $30/bbl • Capital $150 - $160 million 800 • Targeting 55% heavy crude $20/bbl input 400 0 10.00 15.00 20.00 Market crack spread -
Slide 25: Financial
S team generators at our Foster Creek oil sands project. Canada is fortunate to have the oil sands, with enough oil to meet the country’s current energy demand for generations. FINANCIAL “Our financial strategy supports the value pledge we’ve made to investors – to deliver on our commitments, build
Slide 26: Managing risk through a balanced approach
Managing risk through a balanced approach Operational Financial Environmental & • Heavy oil production integrated • Financial strength to support Regulatory with refining capacity growth plans • Integrating environment into • Scalable conventional oil • Natural gas is a financial asset & business pl
Slide 27: Strong cash flow profile supports capital program
Strong cash flow profile supports capital program $ billions 4 3 2 1 0 2010 2011 2012 2013 2014F Committed capital Discretionary capital Cash flow 2014F based on commodity price assumptions outlined in the February 13, 2014 guidance document. Cash flow is a non-GAAP measure. See advisory. Ensuring f
Slide 28: Debt information as at March 31, 2014
Debt information as at March 31, 2014 CAD equivalent Total debt outstanding US ($ millions) ($ millions) 5.70% due October 15, 2019 $1,300 $1,437 3.00% due August 15, 2022 $500 $553 3.80% due September 15, 2023 $450 $497 6.75% due November 15, 2039 $1,400 $1,547 4.45% due September 15, 2042 $750 $82
Slide 29: Mitigating commodity price risk in 2014
Mitigating commodity price risk in 2014 Hedges at Volume Hedge Production Volume % March 31, 2014 hedged price* 2014F hedged Crude hedged 34% Crude 50,000 bbls/d US$99.97 199 Mbbls/d 25% Crude unhedged Natural Gas 111 MMcf/d US$4.17 470 MMcf/d† 24% 49% Differential hedges at $/bbl Volume hedged Refi
Slide 30: Forward-looking information
FORWARD-LOOKING INFORMATION This presentation contains certain forward-looking statements and other information (collectively “forward-looking information”) about our current expectations, estimates and projections, made in light of our experience and perception of historical trends. Forward-looking
Slide 31: Saskatchewan
T100 R1W5 R20W4 R15W4 R10W4 R5W4 R1W4 T100 Wabiskaw/ T95 McMurray T95 Grosmont Telephone Lake Steepbank T90 T90 East McMurray Fort McMurray GREATER PELICAN REGION BOREALIS REGION T85 Saskatchewan Wabiskaw T85 Alberta Grand Rapids Grosmont T80 CHRISTINA LAKE REGION T80 Leismer Hardy Narrows Lake T75
Slide 32: 2014 Corporate Guidance
2014 Corporate Guidance - C$, before royalties February 13, 2014 OIL SANDS Foster Creek Christina Lake Narrows Lake Total Production (Mbbls/d) (1) 54 - 59 62 - 68 116 - 128 Operating cash flow ($ millions) (2) 870 - 970 920 - 1,020 1,790 - 1,990 Capital expenditures ($ millions) 680 - 760 750 - 820
Slide 33: Non-GAAP measures
NON-GAAP MEASURES. This document 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 management activit
Slide 34: Investor relations contacts
Investor relations contacts Susan Grey Director, Investor Relations susan.grey@cenovus.com 403.766.4751 Graham Ingram Senior Analyst, Investor Relations graham.ingram@cenovus.com 403.766.2849 Anna Kozicky Senior Analyst, Investor Relations anna.kozicky@cenovus.com 403.766.4277 Bill Stait Senior Anal