Cenovus Energy Inc. · TSX:CVE
Cenovus Energy — IPO Roadshow (March 2017)
34 slides from Cenovus Energy's IPO roadshow presentation, Mar 29, 2017
Slide 1: Transforming an oil sands leader
Transforming an oil sands leader March 29, 2017 Filed Pursuant to Rule 433 Registration No. 333-209490 March 29, 2017
Slide 2: Advisory
Advisory A final base shelf prospectus containing important information relating to the securities described in this presentation has been filed with the securities regulatory authorities in each of the provinces and territories of Canada. A copy of the final base shelf prospectus, any amendment to
Slide 3: Forward-Looking Information Continued
FORWARD-LOOKING INFORMATION CONTINUED The forward looking information in this presentation also includes financial outlook regarding Cenovus and other forward looking metrics (including production and financial oil and gas related metrics) relating to the Acquisition and the Assets, namely with resp
Slide 4: Forward-looking information reliance
Purchasers should not place undue reliance on the forward looking information contained in this presentation, the final base shelf prospectus, any applicable prospectus supplement or the documents incorporated by reference therein, as actual results achieved will vary from the forward looking inform
Slide 5: Oil and Gas Information
OIL AND GAS INFORMATION With respect to the Assets, the reserves and resources data and related information in this presentation were prepared by McDaniel & Associates Consultants Ltd. ("McDaniel") and GLJ Petroleum Consultants Ltd. ("GLJ"). McDaniel evaluated approximately 84% of the Assets' proved
Slide 6: Oil and Gas Information
OIL AND GAS INFORMATION "Decline rate" is defined as the rate at which proved developed producing reserves are expected to naturally decline according to the evaluation by our independent qualified reserves evaluator. "F&D" is defined as expected initial well costs divided by forecasted average reco
Slide 7: A strategic and transformative transaction
A strategic and transformative transaction 298,000 BOE/d + Reinforces position as an oil sands leader while adding a second growth platform 50% Working Interest in FCCL Emerging Oil Sands Conventional Oil & Gas Refining & Marketing 50% Working Interest in FCCL 178,000 bbls/d of oil sands production
Slide 8: Immediately accretive to per share metrics
Immediately accretive to per share metrics expected to increase 2018F adjusted funds flow per share by 18%, net of planned asset sales expected to reduce 2018F operating costs per BOE by 16% and G&A per BOE by 26%, net of planned asset sales Enhances scale and capital flexibility pro forma productio
Slide 9: Consolidates ownership of top-tier oil sands projects
Consolidates ownership of top-tier oil sands projects no incremental staff or integration required low-risk growth profile with emerging technology upside Deep Basin assets high-grade portfolio high quality position in the prolific Deep Basin of Alberta and British Columbia ~3.0 million net acres wi
Slide 10: Asset overview
Asset overview 298,000 BOE/d (70% liquids) based on 2017F estimates ConocoPhillips’ 50% interest in the FCCL Partnership (178,000 bbls/d 2017F) Majority of ConocoPhillips’ Deep Basin assets (120,000 BOE/d 2017F; 26% liquids; 17% decline rate) 2017F Operating Margin of $1.8 billion based on US$50/bbl
Slide 11: Transaction is fully funded
Transaction is fully funded Launching concurrent $3.0 billion common equity bought deal to fund a portion of purchase price Optimizing portfolio through asset sales Pelican Lake and Suffield in market further asset sales to be initiated in 2017 Targeting 1.0 - 2.0x debt to adjusted EBITDA and 30 – 4
Slide 12: A compelling three-year outlook
A compelling three-year outlook Cenovus Cenovus pro forma impact (%) FORECAST FINANCIAL MEASURES 2017F 2017F (before asset sales) Accretion/ Change 2018F (post asset sales) Accretion/ Change 2019F (post asset sales) Accretion/ Change Adjusted funds flow $/sh $1.90 $2.45 29% $2.15 18% $2.40 20% Opera
Slide 13: Consolidating our interest in top-tier oil sands
Consolidating our interest in top-tier oil sands Overview of FCCL Partnership assets Acquiring remaining 50% interest in two top-tier producing thermal oil sands projects with current production capacity of 390,000 bbls/d lowest portfolio-weighted steam-oil ratios low operating and sustaining capita
Slide 14: Largest & most efficient thermal portfolio
Largest & most efficient thermal portfolio Reinforcing our position as a leader in SAGD Production (Mbbls/d) Portfolio-Weighted SOR Note: Production data and steam-oil ratio based on AER data as of December 2016. Portfolio-weighted SOR calculated based on project operator and is a measure of current
Slide 15: A demonstrated track record of execution
A demonstrated track record of execution Successfully executed 14 major capacity expansions representing 390,000 bbls/d (gross) of production capacity 26% cumulative annual growth rate since 2006 Industry leading capital efficiencies resuming construction of Christina Lake phase G with go-forward ca
Slide 16: Technology innovation enhances value
Technology innovation enhances value Targeting oil sands sustaining capital costs of $7/bbl Each $1/bbl reduction in finding and development costs has the potential to represent an estimated $0.65 billion (gross) in NPV over the remaining life of our producing projects Plans to leverage innovation t
Slide 17: Deep Basin provides second growth platform
Deep Basin provides second growth platform Overview of Deep Basin One of the largest Deep Basin land positions in the WCSB Three core operating areas: Elmworth-Wapiti, Kaybob-Edson, and Clearwater Low decline production base coupled with significant liquids-rich development upside Deep inventory of
Slide 18: Over a decade of future drilling opportunities
Over a decade of future drilling opportunities ~1,500 potential drilling opportunities identified GLJ type curve information IP365 (boe/d) Well costs ($MM,DC&T) Gas (%) IRR (%) NPV 10% before-tax ($MM) Payout (years) F&D ($/boe) Recycle ratio (x) 1 year capital efficiency ($k/flowing) Elmworth-Wapit
Slide 19: Maximizing value in the Deep Basin
Maximizing value in the Deep Basin Expect to run a three rig program in 2017 and ramping up thereafter potential to grow production from 120,000 BOE/d in 2017F to approximately 170,000 BOE/d in 2019F acquired asset base expected to be internally funded Capital will be flexible and can be increased o
Slide 20: The new Cenovus
The new Cenovus Overview One of the largest Canadian energy companies A leader in SAGD development and innovation Substantial inventory of regulatory approved oil sands projects Low decline production base coupled with significant development upside Deep inventory of highly economic drilling opportu
Slide 21: Significant cash generation capacity
Significant cash generation capacity Financial resilience and safe, reliable operations Sustainable returns to shareholders plan to revisit the optimal level of dividend after substantial completion of asset sales Value added growth at Christina Lake phase G and short-cycle, high IRR potential drill
Slide 22: A compelling three-year outlook
A compelling three-year outlook Clear line of sight to production growth through steady capital investment 125,000 bbls/d of potential near-term capacity growth at Christina Lake, Foster Creek, and Narrows Lake over a decade of attractive drilling opportunities already identified on the acquired Dee
Slide 23: Low cost structure drives margin improvement
Low cost structure drives margin improvement Oil sands netbacks remain competitive estimated field level break-even oil price of US$25-$30/bbl WTI Structural cost reductions have improved our sustainability: adjusted dividend and workforce with market conditions ~50% reduction in sustaining capital
Slide 24: Downstream assets provide integration
Downstream assets provide integration Approximately 25% of total blended bitumen price exposure can be mitigated with heavy oil processing capacity Wood River and Borger refineries capable of processing 273,000 bbls/d (gross) of heavy oil Cenovus owns a 50% non-operated working interest Transportati
Slide 25: A strategic and transformative transaction
Provides accretion on key metrics Enhances scale and capital flexibility Maintains financial resilience Consolidates top tier oil sands projects High-grades portfolio with Deep Basin assets A strategic and transformative transaction March 29, 2017 Palliser (53,000 BOE/d ) Weyburn (14 ,000 BOE/d) Oil
Slide 26: Appendix
Appendix
Slide 27: Christina Lake asset overview
Christina Lake asset overview Asset overview One of the highest quality thermal oil sands projects in the industry High average production per well and industry leading steam-oil ratio Christina Lake phase G is the next phase of potential development with production design capacity of 50,000 bbls/d
Slide 28: Foster Creek asset overview
Foster Creek asset overview Asset overview Foster Creek area asset map The first commercial steam-assisted gravity drainage project in the industry High quality reservoir with a December 2016 steam-oil ratio of 2.4 Foster Creek phase H is the next phase of potential development with production desig
Slide 29: Narrows Lake asset overview
Narrows Lake asset overview Asset overview Narrows Lake area asset map Expected to be the first commercial steam-assisted gravity drainage project to utilize solvents in the industry Solvent aided process is expected to reduce SOR by ~30% while increasing recovery factor by ~15% Narrows Lake phase A
Slide 30: Elmworth-Wapiti asset overview
Elmworth-Wapiti asset overview Asset overview Elmworth-Wapiti area asset map ~1.2 million net acres of land developed largely with vertical wells; acreage held by production with minimal expiries Prolific hydrocarbon stack producing oil & gas from multiple formations Strong horizontal liquids-rich d
Slide 31: Kaybob-Edson asset overview
Kaybob-Edson asset overview Asset overview Kaybob-Edson area asset map Asset anchored by Spirit River development and production in Kakwa and Edson Meaningful Montney and Duvernay potential with continued delineation activity by offsetting operators Additional multi-horizon potential given Cretaceou
Slide 32: Clearwater asset overview
Clearwater asset overview Asset overview Clearwater area asset map Significant horizontal development potential across Spirit River, Cardium, and Glauconitic Meaningful offsetting industry activity in recent years despite limited capitalization of the acquired Clearwater assets Infrastructure owners
Slide 33: Deep Basin infrastructure overview
Deep Basin infrastructure overview 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 Basin Ownership and control underpins operational flexibility Excess processin
Slide 34: Supplemental terms of the transaction
Supplemental terms of the transaction 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 quarter multiplied by the difference between the average WCS price and the threshold price of $52.00/bbl Payments and calcu