3Q19 3Q19 Confer Conference Call ence Call Octobe October 31, 2019 r 31, 2019
2 To Today’s C Call 1 1 2 2 3 Strong St ng 3Q 3Q fi financia nancials and ls and U.S. Dom S. Domicil ile & Br & Brand 2020 Outlook 2020 Outlook YTD 2019 highl YTD 2019 highlights hts o Enables larger exposure to o Generate free cash flow and passive capital markets competitive liquids growth o CFPS beat o FCF dedicated to balance sheet o Raised FY production guide due to Anadarko basin performance
3 Q H H I G H L I G H T S G H L I G H T S 3 Demonstr Demonstrate Pr ate Profitable Business ofitable Business Free Cash Flo Fr ee Cash Flow Ŧ Cash Flo Cash Flow Ŧ Net Earnings Net Earn ngs $251 MM $251 MM $817 MM $817 MM $149 MM $149 MM Continued FCF $0.62 / share $0.11 / share generation in 4Q19 Bu Buyback Div Divide dend nd Liquid idity ity Ŧ ~197 MM ~197 MM +25% YTD +25% YTD ~$3.4B ~$3.4B SHS. YTD SHS. YTD ~10-yr avg Bond Tenor, Investment Grade ~13% of O/S shares Ŧ Non-GAAP measures defined in advisories. For additional information regarding non-GAAP measures see the Company’s website
4 YTD 2019 Highlights YTD 2019 Highlights Raised ised G&A synergy e nergy estim timate p te post acquisition sition for 3 3rd t time me • o $200 MM annualized G&A, (original $125 MM) o Anadarko D&C $1.4 MM per well Pr Proven ven Fr Free Cas ee Cash Flo Flow Gener Generation on Raised ised ‘19 p 9 production tion g guidance w ce while c ile capital u tal unchanged nged • 250 ~$230 MM ~$230 MM o Strong 3Q production – significantly above 2H target ranges 200 Returned cash to shareh Return cash to sharehol olders rs • $140 MM $140 MM 150 Addi Additional al o Completed $1.25B buyback program (197 MM shs., ~13% O/S) FCF in 4Q19 FCF in 4Q19 o Increased dividend 25% 100 ~$230 MM of ~$23 MM of YTD YTD free cash flow free cash flow Ŧ , exclu cludin ing a g acquisition sition & & • 50 restru structurin cturing c g costs 2.5% 2.5% 4.2% 4.2% 0 Complete Compl ted d sale sale of non of non-core core China & Arkoma China & Arkoma assets assets • 2018 Full Year 2019 Q3 YTD FCF excl. acquisition costs FCF Yield Enhance Enhanced leade leadersh ship for long for long-term succes m succession and n and conti continuity ty • Announced p ced plans to e establish blish c corporate d orate domicile i cile in the e • United ed S Stat ates es t to unlock s k shareholder der v value Ŧ Non-GAAP measures defined in advisories. For additional information regarding non-GAAP measures see the Company’s website Note: Transaction and restructuring costs of $167 MM. Free cash flow yield calculated using Non-GAAP free cash flow divided by market capitalization at end of period
5 3Q19 Asset Le 3Q19 Asset Level vel Highlights Highlights Permia Permian Anadarko Anadark • Pr Producti oduction: 111 on: 111 MBOE/ MBOE/D • Pr Producti oduction: 162 on: 162 MBOE/ MBOE/D o Efficient growth: 13% YoY growth with 4-rig program o 57 Mbbls/d of oil and condensate volumes o Liquids up 16% YoY proforma • Str Strong Ho ng Howa ward County County r result sults • $1.4 MM r $1.4 MM reducti duction n in in D&C costs D&C costs o 28 gross wells online in 2019 above expectations o Pacesetter wells under $6.0 MM • Continued op Continued oper erationa ional e l execution ecution • Str Strong, cons ng, consiste istent well r nt well result sults gener s generati ting high r ng high returns turns o Optimized wellbore design reducing $/lateral ft. ~11% QoQ o 100% recycled water on 3Q cubes (40% cost savings vs ’16) Montne Montney Base Assets Base Assets • Pr Producti oduction: 210 on: 210 MBOE/ MBOE/D • Pr Producti oduction: 105 on: 105 MBOE/ MBOE/D o 54 Mbbls/d of liquids volumes, 22% 3Q19 YoY growth o Willi Williston on: Infill well outperformance increases inventory o Growing high margin condensate, gas production flat o Eagle le Fo Ford: rd: Strong well performance and operational execution continues to drive free cash flow o Continued condensate type curve outperformance ~20% o Duvernay: Duvernay: Recent 2-well pad averaging 750 bbl/d of • Condens Condensate conti te continues nues to to r real alize ~90% of e ~90% of WTI WTI condensate per well over first 150 days o Strong Edmonton condensate price supports well economics • Shorter cycle times acceler Shorter cycle times accelerati ting pr ng proj oject payo ect payouts uts Note: Base assets include Eagle Ford, Williston, Duvernay and Uinta
A N A D A R K O A N A D A R K O 6 Str Strong Oper ng Operational Performance ational Performance • Curr Current pr ent producti oduction of on of 162 162 MBOE/ MBOE/D All 2019 STACK Wells (103 Gross Meramec) (1) o 2019 program tracking oil type curve 150 o Base production contributing to outperformance • Pr Premium B ium Black O ack Oil ac il acreage age an and l d leading e ading execution ution delivering livering t top t p tier r er returns turns 100 Mbbls (Oil) o Cube development leading to ~90-day cycle times o Increased completion efficiency: +21% average pump time and >2X increase in pumped fluid volumes 3Q19 vs ’18 50 35% Reduction in YTD Cycle Times (da 35% Reducti n in YTD Cycle Times (days) 0 145 145 0 60 120 180 240 300 360 112 112 91 91 Producing Days Legacy NFX operations 2019 STACK Production YTD STACK 2019 TC 1Q Q1 2Q Q2 Q3 3Q PROVING PR ING O OPER ERATION IONAL EX AL EXCELL CELLEN ENCE Fast Faster er cyc cycle time times = = lo lower wer co cost sts, acce accelerate lerated l d learn arnings, ngs, and h higher r er returns rns (1) Normalized to 10,000’ lateral length
A N A D A R K O A N A D A R K O 7 ST STACK Cubes Posting Consistent Results K Cubes Posting Consistent Results Encana Cube Wells (40 Gross) 1 • Oil o Oil outpe tperfo formance driving r rmance driving returns turns 150 o 40 high intensity ECA cube-style completions showing Mbbls (Oil) strong results at 6 – 8 wells per section with similar job 100 size 50 o 24 legacy Black Oil wells tracking type curve 0 0 60 120 180 240 300 360 Initial ECA Cube Style Completions (6 – 8 wells per section) Encana Cube Wells (40 Gross) 1 300 250 200 MBOE 150 100 50 0 0 60 120 180 240 300 360 Producing Days Pre ECA (24 Wells) Cube Dev (40 Wells) STACK 2019 TC (1) Normalized to 10,000’ lateral length
8 ST STACK Competes Acr K Competes Across Industry ss Industry Driving C ing Competitive itive r returns rns Contiguous core acreage in heart of play Favorable royalty structure Industry leading D&C costs Advantaged marketing arrangements Efficient cost structure at scale ST STACK Day W K Day Webcast & bcast & Field Field T Tour ur • Januar January 29 & 30, 2020 29 & 30, 2020 STACK r ST K returns compete with turns compete with o Oklahoma City, webcast & field tour Permian: Perm ian: >50% IRR (B >50% IRR (BTAX) X) • Addi Additional dat data at ti at time of of even vent MARK Y MAR YOUR UR CALE CALENDAR AR
9 U.S. Domicile Incr S. Domicile Increases Access to Capital eases Access to Capital Why Why? Highlights ighlights Shareholder friendly providing additional • Passive investing trend continues to rise liquidity & capital market access • Required for inclusion in many U.S. index funds • U.S. peers realize substantially more passive ownership Aligns Encana with U.S. domiciled peers • U.S. equity market is substantially larger vs. CAN • >600 MBOE/D with >235 Mbbls/d of crude & condensate Leading unconv. oil and condensate company • >80% of 2019 capital investment in the U.S. • Scale & capital discipline providing recurring FCF Ŧ generation Reflects transformation to the “New E&P” • Investment grade rated with de-leveraging profile • Remain dual listed on NYSE & TSX Low cost opportunity to unlock value 1 • No changes to business plan, operations or strategy SHAREHOLDE SHAREHOLDER V VOTE EARL TE EARLY 2020 Y 2020 Ŧ Non-GAAP measures defined in advisories. For additional information regarding non-GAAP measures see the Company’s website (1) Shareholder Q&A available on our website. Preliminary proxy statement / prospectus to be filed on EDGAR and SEDAR in early November 2019
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