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G L O B A L C A P I TA L M A R K E T S • G L O B A L C O R P O R AT E C R E D I T P R O D U C T S • G L O B A L I N V E S T M E N T B A N K I N G • S T R AT E G I C M E R C H A N T B A N K I N G
TABLE OF CONTENTS
Cenovus Advisory .................................................................page 2
Executive SummaryHighlights ................................................................................page 3Properties Production and Land Summary ................................page 3
Shaunavon SOLDShaunavon Highlights ..............................................................page 4 Shaunavon Production and Land Summary ..............................page 4Shaunavon Property Overview ..................................................page 5
Estevan Bakken OverviewEstevan Bakken Highlights .......................................................page 8 Estevan Bakken Production and Land Summary ........................page 8Estevan Bakken Property Overview ...........................................page 9
Sale Procedure .....................................................................page 12Abbreviations ......................................................................page 13
CIBC CONTACTS
Mark Horsfall Managing Director,
Head of Global Energy403-260-0501
Chris Rutherford Executive Director
Bryan BergDirector
Denise PoleyHead Acquisitions & Divestitures
SASKATCHEWAN OIL OPPORTUNITIES
CENOVUS ADVISORYThe sole purpose of this document is to provide to prospective purchasers an introduction to the Company’s oil producing assets in the Shaunavon and Estevan Bakken areas of Saskatchewan (the “Assets”).
Forward-looking Information. This document contains forward-looking information and other internal data prepared by Cenovus for the sole purpose of facilitating an evaluation of the Assets in furtherance of submitting a proposal. The forward- looking statements may be identified by words such as “expect”, “potential”, “scheduled”, “promising”, “believes” or similar expressions suggesting future outcomes including statements about expected production, planned phases, drilling expectations, potential for increased recovery, location of production, success of waterflood techniques and tertiary recovery, and transportation and sale of production associated with the Assets. The forward-looking statements involve assumptions, risks and uncertainties that are not discussed in this document. As a result, this document is not to be relied upon for the purpose of purchasing the Assets or making an investment in Cenovus.
Readers are cautioned not to place undue reliance on forward-looking information as the actual results or estimates associated with the Assets could differ materially from the information disclosed herein.
The forward-looking information contained in this document, including the underlying assumptions, risks and uncertainties, are made as of the date of this document. Developing forward-looking information involves reliance on assumptions and consideration of certain risks and uncertainties, some of which are specific to Cenovus and others that apply to the industry generally. These factors and assumptions are described in our most recent Annual Information Form (AIF) and our most recent Management’s Discussion and Analysis, all of which are available on our website at www.cenovus.com.
Barrels of Oil Equivalent. Certain natural gas volumes have been converted to barrels of oil equivalent (boe) on the basis of one barrel (bbl) to six thousand cubic feet (Mcf). Boe may be misleading, particularly if used in isolation. A conversion ratio of one bbl to six Mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent value equivalency at the well head.
CIBC Griffis & Small - 3
EXECUTIVE SUMMARY
Cenovus Energy Inc. (“Cenovus” or the “Company”) has engaged CIBC Griffis & Small (“CIBC”) to assist with the sale of its oil producing assets in the Shaunavon and Estevan Bakken areas of Saskatchewan (the “Assets”). Cenovus will consider all proposals for either of the individual properties or the total package. However, the Company reserves the right to evaluate offers according to select criteria, at its sole discretion.
Opportunity Highlightsu Large ‘resource play’ oil assets in the Lower Shaunavon and Bakkenu High working interest (WI) and operated production (Avg. WI 97%)u Large land baseu Current production of 5,766 boe/d (98% oil)u Upper Shaunavon play extension upsideu Significant horizontal infill drilling opportunitiesu Secondary and tertiary development potentialu Additional prospective zones include the Midale and Torquay
Current Net Production Summary*
Area Oil Gas Boe Oil (bbl/d) (Mcf/d) (boe/d) (%)Shaunavon 5,017 - 5,017 100Estevan Bakken 644 632 749 86Total 5,661 632 5,766 98* Monthly average January 2013 - Lease Operating Statements
Land Summary Developed Undeveloped Total Land(Hectares) Gross Net Gross Net Gross Net Avg. WIShaunavon 8,299 8,169 5,872 5,745 14,171 13,914 98% Estevan Bakken 1,618 1,507 3,970 3,726 5,588 5,233 94%Total 9,917 9,676 9,842 9,471 19,759 19,147 97%
EXECUTIVE SUMMARY
Edmonton
Calgary
Regina
T120
T110
T100
T90
T80
T70
T60
T50
T40
T30
T20
T10
94-O94-P
94-J94-I
94-G94-H
94-B
93-O93-P
93-J93-I
R10
W6M
W5M
W4M
R20
R20
R10R1
0
W3M W
2M
R20
R10
R10
R20
A L B E R T A S A S K A TCH EWANB . C .
Lloydminster
Ft. McMurray
Grande Prairie
EstevanBakken
ShaunavonSOLD
4 - Saskatchewan Oil Opportunities
SHAUNAVON OVERVIEW
SHAUNAVON OVERVIEW
Opportunity Highlightsu High quality, large Original Oil In Place (OOIP) resource play asset with production and reserves upside - Large, focused land base consisting of 14,171 gross hectares - 5,017 bbl/d net (~23° API) from 138 producing Hz wells - Current production exclusively from the Lower Shaunavon - 100% operated with high WI (averaging ~98%) - Low-risk, predictable production and reserve baseu New exploration area in Upper Shaunavon - Significant uphole horizontal development opportunityu Significant growth opportunities and upside through optimization, infill drilling, waterflood development - Early stage development with <1% recovered to date - 130+ unrisked drilling locations at 5 wells/section; downspacing potential to 8+ wells/section - Waterflood pilots progressing and expect full field rollout (Crescent Point continues to achieve positive results and is increasing waterflood capital spending in 2013) - Recovery factor potentially exceeding 20% - Tertiary recovery potential being investigatedu Owned and operated infrastructure - Majority of production tied in to new satellites/battery in October 2012 leading to lower operating costs - Third party processing potentialu Rail transport access enables enhanced netbacks - Estimated between $15/bbl - $20/bbl
Current Net Production Summary* Oil Gas Boe Oil (bbl/d) (Mcf/d) (boe/d) (%)Shaunavon 5,017 - 5,017 100* Monthly average January 2013 - Lease Operating Statement
Land Summary Developed Undeveloped Total Land(Hectares) Gross Net Gross Net Gross Net Avg. WIShaunavon 8,299 8,169 5,872 5,745 14,171 13,914 98%
SHAUNAVON LAND
Cenovus LandCenovus Well
R21 R20 R19 R18W3
T4
T5
T6
T7
SOLD
CIBC Griffis & Small - 5
SHAUNAVON OVERVIEW
Wellsu 138 producing Hz wells - 136 Cenovus wells - 2 partner wellsu 1 Hz injection wellu 4 disposal wellsu 19 cores
Seismicu Approximately 83% of the lands are covered by Cenovus proprietary merged 3D seismic (2 individual surveys)u 16 trade 2D seismic lines
Development Upsideu Upper Shaunavon development - Significant uphole horizontal development opportunity - Production immediately offsetting Company lands - Logs on Company land support prospectivity - 3D seismic coverage and well control clearly delineate reservoir distribution - Significant synergies due to existing infrastructure investments having been completed u Cenovus has planned several phases of field optimization, the first of which is underway u Infill drilling and downspacing - The majority of the area is developed at 4 wells/section which the Company believes can be infill drilled to 8+ wells/section - 8 wells/section infill pilot at Section 27-006-19W3 shows promising results for increased recovery
Secondary and Tertiary Recoveryu Secondary recovery - The Shaunavon is a good candidate for waterflood development - Several water injection schemes are proximal to Company lands - Cenovus has initiated a waterflood pilotu Tertiary recovery - A study has been commissioned to evaluate CO2 flooding
SHAUNAVON WATERFLOOD/INFILL AREAS
Cenovus LandCenovus WellShaunavon Injection Well
R21 R20 R19 R18W3
T4
T5
T6
T7
Section 27Infill Pilot 8 Wells Per Section
SOLD
6 - Saskatchewan Oil Opportunities
SHAUNAVON OVERVIEW
SHAUNAVON REGIONAL MAP
T12
T10
T8
T14
T6
T4
T2
R17R21 R19 R15W3R23
Cenovus LandUpper Shaunavon WellLower Shaunavon WellInjection Well
Gull Lake
Butte
Instow
Leitchville
Dollard
Chambery
White Mud
Rapdan
Shaunavon Regional Geologyu Situated in the northwestern margin of the Williston Basinu The Jurassic aged Shaunavon is gradational with the underlying Gravelbourg Formation and is conformably overlain by shales of the Rierdon Formationu Two distinct producing units, the Upper and Lower members
After: Kent and Smith 2009
Oolitic Shoal
Shoal FlankShoal FlankProximal Off-Shoal
Distal Off-ShoalProtected or BelowFair-weather Wave Base
SCHEMATIC REPRESENTATION OFLOWER SHAUNAVON FACIES IN THE LEITCHVILLE AREA
Lower Shaunavonu Shallow marine platform limestoneu Regionally extensive, oolitic and dolomitic in the upper portionu Focus of developing unconventional play since 2006
U
L
G
LOWER SHAUNAVON - 102/15-27-006-19W2/00
SOLD
CIBC Griffis & Small - 7
1-15Main Battery
SHAUNAVON INFRASTRUCTURE MAP
Cenovus LandCenovus PipelineOil Pipeline
R21 R20 R19 R18W3
T4
T5
T6
T7
Infrastructureu Pipeline and satellite infrastructure has been installed in the field to improve overall production efficiency and lower operating costsu Seven satellites are pipeline connected and flow to a main battery located at 01-15-006-19W3M (100% WI)u Remaining wells not tied into the gathering system are trucked to one of the truck-in metering terminals at the main batteryu The Company owns and operates over 127 km of pipeline in this area
Marketingu 50% of current production is trucked to a rail terminal to yield premium pricingu Pipeline volumes connected to Plains South Saskatchewan Pipeline and sold as conventional heavy stream at Regina
SHAUNAVON OVERVIEW
Upper Shaunavonu North-south trend that has produced hydrocarbons since the 1950’su Reservoirs include primarily sandstones, oolitic and argillaceous limestones and coquinas deposited in shallow marine, shore and nearshore environments u The Shaunavon Graben as well as basement structures, salt dissolution and incised valleys are important structural controls on oil accumulation
Cenovus Asset Area Geologyu Tight unconventional oil play with production from the Lower Shaunavon limestoneu Hydraulically assisted stratigraphic oil trapu Target includes oolitic shoal, fossil bed development with increased porosity and permeability in the top 5-10 m of the Lower Shaunavon u Fracturing (both natural and through multi stage frac’ing) enhances productionu ~1,400 m average well depthu Medium gravity oil (~23o API)u Upper Shaunavon - Shallow marine, shore to nearshore environment - Primarily sandstone with minor limestone, dolomite interbeds
U
L
UPPER SHAUNAVON - 101/07-07-006-19W2/00
SOLD
8 - Saskatchewan Oil Opportunities
ESTEVAN BAKKEN OVERVIEW
ESTEVAN BAKKEN OVERVIEW
Opportunity Highlightsu High quality, light oil resource play asset with significant development potential - 5,588 gross hectares of high WI land - 749 boe/d net (43° API, 86% oil) from 19.3 Hz net wells (24 gross wells) - 98.5% of production is operated with WI averaging 94% - Low-risk, predictable production and reserve baseu Primary development with future development well established - Low recovery factor to date of 6.2% - 60 unrisked drilling locations at 4 wells/section - Waterflood pilots progressing and expect full field rollout (analog area operators’ pilots progressing as well) - Potential recovery factor of 35-50% - Tertiary (CO2) recovery potential (evaluation underway) - Additional zone potential in Torquay and Midale with offset industry activityu Owned and operated infrastructure - Majority of production tied in to new satellites/battery in June 2012 leading to lower operating costs - Third party oil/water processing potentialu Rail transport access enables enhanced netbacks - Estimated between $10/bbl - $15/bbl
Current Net Production Summary* Oil Gas Boe Oil (bbl/d) (Mcf/d) (boe/d) (%)Estevan Bakken 644 632 749 86* Monthly average January 2013 - Lease Operating Statement
Land Summary Developed Undeveloped Total Land(Hectares) Gross Net Gross Net Gross Net Avg. WIEstevan Bakken 1,618 1,507 3,970 3,726 5,588 5,233 94%
ESTEVAN BAKKEN LAND
Cenovus LandCenovus Well
R8 R7 R6 R5W2
T1
T2
T3
CIBC Griffis & Small - 9
ESTEVAN BAKKEN OVERVIEW
Wellsu 24 producing Hz wells - 18 Cenovus wells - 6 partner wellsu 1 Hz injection wellu 1 disposal wellu 20 cores
Seismicu 26 Cenovus exclusive proprietary 2D seismic lines totaling approximately 260 linear kmu 11 trade 2D seismic lines
Development Upsideu Cenovus has planned several phases of field optimization, the first of which is underway u Infill drillingu Exploration potential untested to the east
Secondary and Tertiary Recoveryu Secondary recovery - Several operators, including Cenovus, have operating waterflood pilot projects in this area - Cenovus began water injection at 191/12-27-001-07W2/00 in October 2012 - Legacy has three water injectors directly offsetting Company lands which have been operating since early 2011 u Tertiary recovery - A study has been commissioned to evaluate CO2 flooding
ESTEVAN BAKKEN WATERFLOOD PILOT AREAS
R8 R7 R6 R5W2
T1
T2
T3
Cenovus LandCenovus WellBakken Injection Well
LegacyWaterfloodPilot
CenovusWaterflood
Pilot
10 - Saskatchewan Oil Opportunities
Upper Middle Bakken
Structural Bakken Sand Play Stratigraphic Bakken Sand Play Bakken Siltstone Resource Play
Bakken Sandstone
Lower Middle Bakken
Lower Bakken Shale
Upper Bakken Shale
BAKKEN PLAY SCHEMATIC
SW NE
Source: Canadian Discovery
Big Snow Group Kibbey
Poplar
Charles Ratcliffe
MidaleFrobisher
AlidaMissionCanyon
Lodgepole
Tilston
Souris Valley
Bakken
Big ValleyTorquay
Birdbear
Duperow
Souris River
Saskatchewan Group
Manitoba Group
Three Forks GroupM
adiso
n G
roup
Kisbey
STRATIGRAPHIC COLUMN
ESTEVAN BAKKEN OVERVIEW
R9
ESTEVAN BAKKEN REGIONAL MAP
Cenovus LandBakken ProductionMidale ProductionTorquay ProductionMidale Subcrop Frob. Anhy.Midale Carbonate Subcrop
R7 R5W2
T1
T3
T5
T7
T9
Weyburn
Midale
Torquay
Estevan
Regional Geologyu The Bakken Formation unconformably overlies carbonates of the Upper Devonian Big Valley and Torquay and is conformably overlain by carbonates of the Mississippian Lodgepole Formationu The Bakken is divided into Upper, Middle and Lower members with an onlapping relationship where each younger member overlaps the older memberu Production is restricted to the Middle member siltstones and sands that were deposited in a shallow marine shoreface environment u The Upper and Lower Bakken members are comprised of organic rich black shales that were deposited in an offshore marine environment
CIBC Griffis & Small - 11
5-27Main Battery
ESTEVAN BAKKEN INFRASTRUCTURE MAP
R8 R7 R6 R5W2
T1
T2
T3
Cenovus LandCenovus PipelineOil Pipeline
Infrastructureu Pipeline and satellite infrastructure has been installed in the field to improve overall production efficiency and lower operating costsu Production passing through the pipelines and the satellites flows to a main battery located at 05-27-001-07W2M (100% WI)u Two remote satellites and a remote wellsite are pipeline connected to the main batteryu The Company owns and operates over 46 km of pipeline in this area
Marketingu No long term marketing commitmentsu 90% of current production is trucked to a rail terminal to yield premium pricingu Remainder of production is connected into the Saskatchewan gathering system and sold at Cromer
ESTEVAN BAKKEN OVERVIEW
X
TORQUAY/THREE FORKS
SOURIS VALLEY/LODGEPOLE
UPPER BAKKEN
MIDDLE BAKKEN - UNIT C
MIDDLE BAKKEN - UNIT B
MIDDLE BAKKEN - UNIT A1
MIDDLE BAKKEN - UNIT A
LOWER BAKKEN
BAKKEN - 141/09-27-001-07W2
Estevan Bakken Area Geologyu Middle Bakken (Unit B) target sandu Lower shoreface sand, heavily cemented with dolomiteu Stratigraphically trapped with pinchout to the north and eastu Average thickness of 2.8 mu Porosity of 8-10%u Permeability of ~2.0 mD u ~2,100 m depth u Light sweet oil (43o API)
12 - Saskatchewan Oil Opportunities
SALE PROCEDURE
Chris Rutherford Executive Director [email protected]
Cenovus has engaged CIBC Griffis & Small to assist with the sale of its oil producing assets in the Shaunavon and Estevan Bakken areas of Saskatchewan. Cenovus will consider all proposals for either of the individual properties or the total package. However, the Company reserves the right to evaluate offers according to select criteria, at its sole discretion.
Proposal – A formal Proposal guidance letter will be distributed, outlining instructions for submitting a Proposal.
Confidentiality Agreement (“CA”) – Signed CAs should be forwarded by email, fax or courier to Bryan Berg.
Confidential Information – Once a CA has been executed, confidential information will be made available to qualified parties through:- Access to a virtual data room (“VDR”)- Technical Presentations
VDR – Once a CA has been executed, a CIBC representative will contact you with an invitation to join the VDR.
Technical Presentations – Presentations will be held in CIBC’s Calgary office, listed in Contacts. Parties interested in a presentation should arrange a time through Bryan Berg.
Questions and Answers – All questions should be submitted in writing by email to a CIBC contact listed to the right.
Contacts – Interested parties are not to contact the Company directly. All communications, inquiries and requests for information relating to the process should be directed to one of the CIBC representatives listed below.
SALE PROCEDURE
Denise PoleyHead Acquisitions & [email protected]
CIBC World Markets Inc.9th Floor, Bankers Hall East 855 – 2nd Street SWCalgary, Alberta T2P 4J7Fax: 403-260-0524
Bryan BergDirector [email protected]
Mark Horsfall Managing Director,Head of Global [email protected]
NOTESABBREVIATIONS
API American Petroleum Institute Gravitybbl barrelsbbl/d barrels per dayboe barrels of oil equivalentboe/d barrels of oil equivalent per dayEOR enhanced oil recoveryHz horizontalLNG liquefied natural gasLPG liquid petroleum gasMbbl thousand barrelsMbbl/d thousand barrels per dayMMbbl million barrelsMMbbl/d million barrels per dayMcf thousand cubic feetMcf/d thousand cubic feet per dayMcfe thousand cubic feet equivalentmD millidarcym metreskm kilometresMM millionMMcf million cubic feetMMcf/d million cubic feet per dayMMcfe million cubic feet equivalentMMcfe/d million cubic feet equivalent per dayOOIP Original Oil In PlaceTcf trillion cubic feetTcfe trillion cubic feet equivalentWI working interest2D Two Dimensional3D Three Dimensional
CIBC World Markets Inc.
9th Floor, Bankers Hall East 855 – 2nd Street SW
Calgary, Alberta T2P 4J7
CIBC World Markets Inc.9th Floor, Bankers Hall East Tower
855 – 2nd Street SWCalgary, Alberta T2P 4J7
