Cenovus Energy Inc. · TSX:CVE
Cenovus Energy — Merger or Acquisition (October 2020)
27 slides from Cenovus Energy's merger presentation, October 2020
Slide 1: Creating a Resilient Integrated Energy Leader
CREATING A RESILIENT INTEGRATED ENERGY LEADER (TSX: CVE) (NYSE: CVE) (TSX: HSE)
Slide 2: Leadership and Governance
Leadership and Governance Leadership Alex Pourbaix Jeff Hart Jon McKenzie Track record of operational excellence, capital discipline, cost management and strong safety performance Other senior executives will be selected from top talent of both companies President & CEO EVP & CFO EVP & COO Board Kei
Slide 3: Benefits of the combination
Benefits of the combination Combination creates a resilient integrated energy leader that delivers value accretion for all shareholders Accretive Synergies & Balanced Credit on day 1 Cost Structure Portfolio Profile Accretive to Annual synergies Integrated across Support for cash flow per share, $1.
Slide 4: Transaction summary
Transaction summary Transaction Consideration Ownership Conditions & approvals All share transaction Husky common Pro forma equity ownership Unanimously approved by shareholders to receive for each common share 61% Cenovus each of Cenovus’s and Structured as a plan of 0.7845 Cenovus shares 39% Husky
Slide 5: Integrated portfolio of high-quality assets
Integrated portfolio of high-quality assets Combining high-quality, low-cost heavy oil assets with extensive midstream / downstream infrastructure Top-tier heavy oil assets Extensive midstream & downstream network FCCL – best-in-class oil sands assets with low Combined pipeline, rail, storage an
Slide 6: High-quality, diverse & integrated portfolio
High-quality, diverse & integrated portfolio Complementary assets provide geographic diversification, physical integration and market access coupled with long-life 2P reserves of ~9.0 Bboe (RLI of ~33 years) 2020 YTD Production Rainbow Sunrise Asia Atlantic Atlantic Pacific Canada 3% 6% Marten Hills
Slide 7: Balanced integrated heavy oil value chain
Balanced integrated heavy oil value chain Creates a resilient company with reduced exposure to Alberta heavy oil price differentials Heavy oil blend vs. processing and export capacity Reduced exposure to 900 Alberta WCS prices 800 Canada 700 600 (Mbbls/d) 500 400 PADD II 300 PADD IV PADD I 200 PADD
Slide 8: Enhanced operating scale
Enhanced operating scale Combined company will be one of the largest Canadian integrated oil and gas producers 2021E production Downstream capacity(1) 1,400 2019 2P reserves 18 1,200 Upgrading capacity 2021E production Refining capacity 16 1,200 1,000 14 1,000 2P Reserves - Bboe 12 800 (Mbbls/d) (Mb
Slide 9: $1.2 billion per year in run-rate synergies
$1.2 billion per year in run-rate synergies ~$900 million of the run-rate synergies expected to be achieved within first year, ~$600 million within the first 6 months ($MM per year) A Workforce reductions, operating & other cost synergies • Management and corporate support • Overlapping positions ac
Slide 10: Lloydminster refinery & upgrading complex synergy
Lloydminster refinery & upgrading complex synergy There is strong industrial logic to physically integrate FCCL’s low-cost production with the Lloyd Complex, however this is not included in the $600 million of cash flow synergies Physical integration of FCCL’s low cost production with the Lloyd Comp
Slide 11: Efficiencies through returns-focused sustaining capital allocation
Efficiencies through returns-focused sustaining capital allocation The combined company will be positioned to more efficiently allocate capital across the combined portfolio on a returns-focused basis, significantly reducing sustaining capital ($MM per year) $1,800 $3,000 Sustaining capital requirem
Slide 12: Accretive on free funds flow break-even
Accretive on free funds flow break-even Forecasted break-even reductions anticipated through 2022 from optimization of cost structure and shortening heavy oil value chain Illustrative free cash flow break-even $37 WTI break-even lowered relative to both Cenovus and Husky through an optimized $36 p
Slide 13: Combined assets provide cash flow stability
Combined assets provide cash flow stability Reduced locational differential risk while maintaining healthy exposure to global pricing Balances net asset value (illustrative sensitivity)(1) AFF Sensitivity to US$1/bbl change(2) Husky Cenovus Pro forma 10% 5% +$1 WTI Implied net asset value per share
Slide 14: Positioned for free funds flow across the cycle
Positioned for free funds flow across the cycle More stable revenue profile leads to more predictable funds flow relative to Cenovus standalone business Illustrative 2021 free funds flow and free funds flow yield (1) $5.0 FFF One-time integration cost Adjusted FFF yield 50% Lower break-evens and c
Slide 15: Balance sheet supports investment grade credit profile
Balance sheet supports investment grade credit profile Cenovus will continue its commitment to balance sheet strength and prioritization of an investment grade credit rating Net debt & net debt/LTM EBITDA (1) Attractive debt maturity profile(2) $20 Net debt Net debt/LTM EBITDA 5.0 US$ maturities C$
Slide 16: Disciplined capital allocation priorities
Disciplined capital allocation priorities Prioritize investment grade credit rating Safe & reliable operations / sustaining capital Capital allocation principles Committed ~$2.4 billion per year capital Maintain strong balance sheet Base dividend $0.07/share annualized ($0.0175/share paid quarterl
Slide 17: Committed to safety and ESG leadership
Committed to safety and ESG leadership Global energy supplier of choice in the transition to a lower-carbon future Climate & Indigenous Environmental Diversity & emissions reduction communities stewardship inclusion Ambition of net zero Ongoing engagement Minimizing impact on Committed to emissions
Slide 18: Next steps
Next steps Husky shareholder approval required by 66⅔% of votes cast, Cenovus shareholder approval required by majority of votes cast, with voting expected to occur in December 2020 Cenovus’s Board of Directors unanimously supports the transaction and recommends that shareholders vote in favour
Slide 19: Why own the new Cenovus going forward?
Why own the new Cenovus going forward? Combination creates a resilient integrated energy leader that delivers value accretion for all shareholders Leading cost Diversification, Committed to Resilient structure & Committed to integration & shareholder balance sheet returns focused ESG leadership mark
Slide 20: Advisories
Advisories Basis of Presentation All financial figures and information have been prepared in Canadian dollars (which includes references to "dollars" and "$"), except where another currency has been indicated, and in accordance with International Financial Reporting Standards ("IFRS" or "GAAP") as i
Slide 21: Advisories
Advisories Note Regarding Forward-Looking Information This presentation contains certain forward-looking statements and forward-looking information (collectively referred to as "forward-looking information") within the meaning of applicable securities legislation, including the U.S. Private Securiti
Slide 22: Advisories
Advisories Note Regarding Forward-Looking Information (continued) Developing forward-looking information involves reliance on a number of assumptions and consideration of certain risks and uncertainties, some of which are specific to Cenovus, Husky and the combined company and others that apply to t
Slide 23: Advisories
Advisories Note Regarding Forward-Looking Information (continued) The forward-looking information in this presentation also includes financial outlooks and other forward-looking metrics (including production, financial and oil and gas related metrics) relating to Cenovus, Husky, the combined company
Slide 24: Advisories
Advisories Note Regarding Forward-Looking Information (continued) the duration of the market downturn; a resurgence in cases of COVID-19, which has occurred in certain locations and the possibility of which in other locations remains high and creates ongoing uncertainty that could result in restrict
Slide 25: Advisories
Advisories Note Regarding Forward-Looking Information (continued) unexpected difficulties in producing, transporting or refining of bitumen and/or crude oil into petroleum and chemical products; risks associated with technology and equipment, including potential cyberattacks; risks associated with c
Slide 26: Advisories
Advisories Oil and Gas Information The estimates of reserves of Cenovus were prepared effective December 31, 2019 by independent qualified reserves evaluators, based on the COGE Handbook and in compliance with the requirements of National Instrument 51-101 – Standards of Disclosure for Oil and Gas A
Slide 27: Investor relations contacts
Investor relations contacts Sherry Wendt Director, Investor Relations Cenovus Energy sherry.wendt@cenovus.com 403.766.5489 Leonidas Villegas Director, Investor Relations Husky Energy Leonidas.villegas@huskyenergy.com 403.513.7817
Cenovus Energy — Merger or Acquisition (October 2020) on 6ix