Eagle Ford - Encana Corporation · – Most active and profitable trend in the Eagle Ford ... MRO EOG ECA COP PXD MUR DVN ... *Normalized to 5,000’.

ENCANA CORPORATION

Eagle Ford

Eric T. GreagerVice-President & General Manager, Western Operating Area

2

EAGLE FORD

Core Position in the Oil Window

• Largely contiguous position in the Karnes

Trough

– Most active and profitable trend in the Eagle Ford

• Completion innovations leading to better wells

• 2017 well inventory improvement

– Stacked pay, infill spacing, Austin Chalk offer

premium inventory upside

• High value, high rate wells

– >80% of production is high value liquids

– Top quartile performance within industry

3

LEADING OPERATOR

Top Karnes County Producers

0

20

40

60

80

MRO EOG ECA COP PXD MUR DVN

Gro

ss O

pera

ted

Oil

Pro

du

cti

on

(M

bb

ls/d

)

*Data sourced from Drilling Info, Inc. Gross operated production in April, 2017, for Karnes County, TX.

Eagle FordGross Encana Production vs Peers*

4

WELL PRODUCTIVITY

Top Performance vs Peers

Data sourced from IHS, Inc. Includes all data from August 2016 onward. Peers include DVN, COP, EOG, MRO, MUR, COG, CRZO, NBL, EPE, CHK, STO, SN and SM

• Leading well performance in the play since moving to advanced completions

– Driving best in class production efficiency in the Eagle Ford

0

50

100

150

200

Encana Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Peer 12 Peer 13

Oil P

rod

ucti

on

IP

180/1

,000ft

(b

bls

/d)

5

EAGLE FORD CAPITAL EFFICIENCY

Significant Productivity Improvements

*Normalized to 5,000’.

• Return-focused enhanced completions

– 45% performance improvement from 15% D&C

cost increase

– Improvement in production efficiency

• Current D&C cost* of $4.6MM with

advanced completions

• Reduction in drill days

– Drilled pacesetting 8 day well

• Real time geo-steering

Drilling Days vs Depth

0

5,000

10,000

15,000

20,000

0 5 10 15 20

Me

as

ure

d D

ep

th (

ft)

Days

2014 Average

2015 Average

2016 Average

2017 YTD

Pacesetter

6

0

50

100

150

200

250

300

0 30 60 90 120 150 180

Cu

mu

lati

ve P

rod

ucti

on

(M

BO

E)

Days on Production

MARGINS & RETURNS

Eagle Ford Type Well Metrics – Net ECA

Atax IRR (%) 68%

Operating Margin ($/BOE) $30

All metrics based on $50/bbl WTI, $3.00/MMBtu NYMEX

Karnes County

Karnes Eagle Ford Type Curve

IP30 = 1,200 BOE/d

IP180 Oil = 720 bbls/d

EUR = 650 MBOE

D&C = $4.6 MM (incl. advanced completions scope)

Lateral Length = 5,000’

7

INNOVATION SUCCESS - FRAC COMPLEXITY

Thinner Fluids & Tighter Clusters

Early completions

× Bypassed pay

Parameters

• >60’ Clusters

• High Viscosity Fluid

Tight spacing

× Stress shadowing

× Overwhelmed interior

clusters

Parameters

• 25’ Clusters

• High Viscosity Fluid

Complex system

✓ Many thin propped

fractures

Parameters

• <20’ Clusters

• Low Viscosity Fluid

P A S T P R E S E N T

Fracture Complexity Leads to Improved Performance

Completions

Parameter

Historical

Standard

ECA Design

Complex

Fracture

Cluster Spacing (ft) >60 <20

Proppant (lbs/ft) <1,000 >2,000

Fluid System Viscosity High Low

7

0

100

200

300

400

0 100 200 300Cu

mu

lati

ve

Pro

du

cti

on

(M

BO

E)

Producing Days

Past Present

8

EAGLE FORD STACKED AND STAGGERED

Triple Stacking with Complex Fractures

• Optimizing spacing both vertically and

horizontally

• Greater overall resource recovery

• Premium inventory expansion potential

Eagle Ford – 330’ x 80’

Stacked & Staggered Pattern

0

10

20

30

40

50

60

70

0 30 60 90 120 150

Cu

mu

lati

ve P

rod

uct

ion

MB

OE

/ 10

00'

Days on Production

6H4H2H1H

80’

9

0

50

100

150

200

250

300

350

400

0 30 60 90 120 150 180

Cu

mu

lati

ve

Pro

du

cti

on

(M

BO

E)

Days on Production

EAGLE FORD SIGNIFICANT VALUE CREATION

Austin Chalk Development

Austin Chalk Type Curve

IP30 = 1,400 BOE/d

IP180 Oil = 830 bbls/d

EUR = 770 MBOE

D&C = $4.6 MM (incl. advanced completions scope)

Lateral Length = 5,000’

Type Well Metrics – ECA Net

Atax IRR (%) 92%

Operating Margin ($/BOE) $30

Producing Austin Chalk Wells as of 3Q 2017

All metrics based on $50/bbl WTI, $3.00/MMBtu NYMEX

10

EXPANDING MARGINS

Reducing Operating Costs

Eagle Ford Direct Operating Cost

Reductions

$4

$5

$6

$7

$8

$9

$10

2015 2016 2017F

$/BOE

• Leveraging company-wide effort

• Optimized repairs, maintenance, and workovers

– Shifting work in-house

• Supply management gains

– Lower costs on chemicals, water hauling

• Improved artificial lift performance

~20%Improvement in

operating costs

11

Eagle Ford

MIDSTREAM AND MARKETING OVERVIEW

• Firm gas gathering and NGL processing

aligned with asset development program

• Infield gathering and extensive market

assets in place to ensure flow and

downstream connectivity

• Diverse physical marketing portfolio with

access to Gulf Coast refining markets

• Proximity to market minimizes

transportation cost and related

commitments while maximizing margins

Houston

Corpus Christi

Three Rivers

Close proximity to market and

well-developed infrastructure

Eagle Ford

12

ENCANA EAGLE FORD

Massive Value Creation

• ~50,000 BOE/d expected through the

5-year plan

• Free cash flow generator

• Focus on continuing to increase

returns by driving capital productivity

and margins

13

SAN JUAN BASIN

Evaluating Liquids Growth Potential

• 2017 operation highlights

– 6 well program

– 6,100’ average completed lateral length

• Evaluation Program

– Target best rock

– Advanced completion design

– Well spacing trial

– Stacked pay potential

2017 program2017 program