ENCANA CORPORATION Strategic Combination with Newfield Exploration Co. Creating the Premier North American Resource Company November 2018
CREATING THE PREMIER NORTH AMERICAN RESOURCE COMPANY What You Need to Know: 1 Advanced multi-basin onshore model creates scale and sustainability 2 Synergies will significantly benefit shareholders 3 Encana’s expertise in Cube Development is a game changer 4 Enhances return of cash to shareholders 2
CREATING THE PREMIER NORTH AMERICAN RESOURCE COMPANY Defining a Premium Company Characteristics of Premium ECA + Newfield Value Companies • Acquisition creates the premier North Deep inventory of premium return locations in 3 Portfolio & Inventory Depth of North America’s top basins – Permian, American resource company Montney & STACK/SCOOP • Multi-basin – 3 world class plays Free Cash Flow Generation Quality, liquids focused growth & free cash flow Capital Return to Shareholders Buyback of $1.5 billion* and 25% dividend • Quality Growth increase** 3 world class growth assets – Permian, Montney Multi-Basin Optionality • Free Cash Generation and STACK/SCOOP 2nd largest NA unconventional producer Scale • Strong Balance Sheet Pro forma Q3/18 at 577 Mboe/d Accretive to existing 25% CFPS Ŧ growth CAGR CFPS Growth Liquids / Margin 52% liquids immediately Leverage Leverage at target of ~1.5x Production Growth Low to mid-teens top line production growth Ŧ Non-GAAP measures defined in advisories. For additional information regarding non- GAAP measures see the Company’s website. *Post-closing and subject to regulatory approval. Includes $250 million in shares purchased under existing NCIB program. ** Post-closing and subject to Board approval. 3
CREATING THE PREMIER NORTH AMERICAN RESOURCE COMPANY Newfield Acquisition Aligned With Strategy TOP TIER MARKET • Top tier resource, multi-basin optionality RESOURCE FUNDAMENTALS – Core-of-the- core positions in 3 of North America’s top basins • Operational excellence – STACK primed for Cube Development • Market fundamentals BALANCE SHEET STRENGTH – STACK ideally located • Capital allocation – Disciplined capital allocation to core assets • Balance sheet strength – Further strengthens balance sheet and reduces cost of capital OPERATIONAL CAPITAL EXCELLENCE ALLOCATION 4
CREATING THE PREMIER NORTH AMERICAN RESOURCE COMPANY Top Tier Resource in the Core-of-the-Core • Newfield’s STACK acreage in prolific oil window – Thick, oil-saturated porosity with strong deliverability – Best position in STACK oil window with HBP program substantially completed – Contiguous acreage suited to long laterals – Multiple stacked horizons ideal to three dimensional cube approach • Encana’s technical team has studied basin for years • Encana has unrivalled cube experience – Encana has >230 multi-well pads with >1,300 wells – Newfield STACK has 10 multi-well pads with 69 wells • The best team on the best assets will drive strong returns 5
BEST-IN-CLASS STACK/SCOOP ACREAGE POSITION High Oil Content with Attractive Economics Peak Oil Percentage Go-Forward Break-Even Source: RSEG. 6
CUBE DEVELOPMENT STACK Primed for Enhancement Thick stacked reservoirs, like the STACK, allow full application of cube development • Ready to benefit from cube development • – Rapid learnings applied in real time to sequential wells – Reduced logistics for equipment and consumable products (water, sand, drilling fluids, etc.) – Reduced lease construction and fewer rig moves – Reduced cycle times reduce costs on each wells NFX STACK has similar vertical depth and well length to ECA Midland and Montney, giving us confidence in applying our technology • Poised for Cube Development STACK MERGE SCOOP N S NW Extension N Springer NW Extension Anadarko Basin Meramec STACK Osage MERGE Cana WDFD SCOOP SCOOP WDFD S 200 Ft 7
PROVEN EXECUTION TRACK RECORD STACK Ready for Cube Development Multi-well Pad Development Normalized Well Costs ($MM)** • Encana’s drilled >1,300 wells from >230 multi -well pads • Encana drills dramatically lower cost wells in Permian and Montney - STACK is similar depth and lateral length • Many pads used >1 rig, reducing cycle time and cost Encana - Midland ~$750/lateral ft versus peers*** at ~$900/lateral ft • Multi-Well Pads Multi-Well Pad Wells 14.0 10,000 Vertical depth and well length similar to ECA Midland and Montney 237 12.0 1,390 Approximate Total Vertical Depth (ft)* 8,000 Normalized Well Cost ($MM)** 10.0 $7.6 - $8.7 6,000 8.0 $7.1 6.0 $5.5 4,000 4.0 2,000 2.0 69 10 0.0 0 Encana Newfield Encana Newfield NFX STACK ECA - Midland ECA - Pipestone STACK STACK 3-year Plan Normalized Well Cost Vertical Depth (TVD) ECA ECA ECA ECA Newfield Source: Newfield investor presentation and SEC filings. * IHS data. Midland Montney Eagle Ford Duvernay STACK ** Newfield 3 year plan well cost based on STACK modeling assumptions disclosed in February 2018 investor presentation based on an average 8,907 ft well. ECA Midland and Montney D&C costs normalized to 8,907 ft based on well costs disclosed in November 2018 corporate presentation plus an additional $500k added for facility costs. *** Peers include Daimondback, Earthstone, Energen, SM Energy, RSP Permian, Pioneer, QEP. 8 Source: RSEG and company reports
1.3 Mmboe TC STACK IS PRIMED FOR CUBE DEVELOPMENT Well Count Various Spacing Tests Confirm Cube Potential 6 MRMC wells / DSU 1 8 MRMC wells / DSU 25 25 Avg. Cumulative Production (Mboe)* 350 350 Avg. Cumulative Production (Mboe)* 2 • 69 wells across 10 300 300 20 20 DSUs demonstrate 250 250 Well Count Well Count repeatability of MRMC 15 15 200 200 during development 150 150 10 10 • Geology is well- 4 tests 3 tests 100 100 5 5 understood due to 50 50 rigorous delineation 0 0 0 0 0 3 6 9 12 15 18 0 3 6 9 12 15 18 program deployed early Months Online Months Online in play assessment 10 MRMC wells / DSU 12 MRMC wells / DSU 25 350 Avg. Cumulative Production (Mboe)* 2 25 • Thoughtful well Avg. Cumulative Production (Mboe)* 350 300 20 placement during HBP 300 20 250 maximizes undisturbed 250 Well Count 15 Well Count 15 200 200 resource 150 10 150 10 100 100 2 tests 1 test 5 5 50 50 0 0 0 0 0 3 6 9 12 15 18 0 3 6 9 12 15 18 Months Online Months Online *Average development well performance 1 Includes one DSU with 4 wells d rilled 1,700’ apart in one layer 9 2 5,000’ lateral normalized to 10,000’
STACK ASSETS HIGHLY COMPETITIVE High Quality Investment Opportunities • STACK wells competitive with best plays in North NFX 3-year ECA Midland/ Plan Upton America STACK Type Curve* Type Curve* • STACK wells very similar to Encana Permian IP30 (BOE/d) 1,313 1,300 premium wells IP180 (BOE/d) 933 900 • Expect additional upside to well returns with cost reductions and completion improvements Liquids EUR/well (Mbbls) 1,100 860 EUR/well (MBOE) 1,360 1,300 Total Vertical Depth (ft) ~9,000 ~9,000 * Type curves have been normalized to 10,000’ laterals 10
POSITIVE FREE CASH FLOW IMPACT Acquired Assets Immediately and Materially FCF Ŧ Positive NFX’s Annualized Q3 2018 FCF (1) adjusted for High Confidence Synergies • Acquisition FCF Ŧ positive with only the high ~$186 confidence G&A synergies ~$125 • Additional well cost reductions increase FCF Ŧ • Additional synergies possible from improved well performance and development optimization ~$125 • Enhances return of capital to shareholders ~($64) Annualized G&A* Cost Well Cost** Synergies- Q3 Savings Synergies adjusted 2018 FCF FCF(1) Deficit(1) Ŧ Non-GAAP measures defined in advisories. For additional information regarding non- GAAP measures see the Company’s website. Source: Newfield filings. 1 Free cash flow (FCF) calculated based Q3/2018 three months ended Cash Flow from Operating Activities, less Cash Flow from Investing Activities. Annualized for the full year. * Based on $125MM annualized G&A savings. ** Based on well cost savings of $1MM/well in the STACK/SCOOP applied to 39 (80% WI) operated wells placed on production during Q3/2018 three months 11 ended. Annualized for the full year.
CREATING THE PREMIER NORTH AMERICAN RESOURCE COMPANY What You Need to Know: 1 Advanced multi-basin onshore model creates scale and sustainability 2 Synergies will significantly benefit shareholders 3 Encana’s expertise in Cube Development is a game changer 4 Enhances return of cash to shareholders 12
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