The Role of Innovation in Supply Management

Transcription

1 The Role of Innovation in Supply Management Crescent Point Energy November 15 th, 2016 Crescent Point Energy is one of Canada s largest light and medium oil producers, based in Calgary, Alberta. The Company is focused on growing its significant resource base in the Williston Basin, Southwest Saskatchewan and the Uinta Basin in Utah. 1

2 COMPANY SNAPSHOT TSX: CPG NYSE: CPG:US 2016 Average Production 167,000 boe/d 2016 Capital Expenditures $1.1 billion Market Capitalization $8.2 billion 1 Largest Canadian producer in Williston Basin (among top five in North America) High-netback asset base (~CDN$25/boe at WTI of US$45/bbl) Net Debt Enterprise Value $3.6 billion $11.8 billion ~580 million boe of organic technical reserves revisions since inception Proved + Probable Reserves mmboe (~15 years) 2 3 Drilling Inventory ~7,700 locations (~13 years) average production and capital expenditures are based on guidance as of November 10, Lowered decline rate over last several years (Forecast 28% in 2016) Proven Management Team Excellent Balance Sheet High-Quality Asset Base FOOTNOTES INCLUDED IN THE BACK AS ENDNOTES 2

3 FOCUSED GROWTH Southwest Saskatchewan >23 Billion Barrels of OOIP Williston Basin ~940,000 net acres ~35,000 boe/d Southwest Saskatchewan Williston Basin ~2.3 million net acres ~100,000 boe/d Viking Uinta Basin OOIP >5.2 billion barrels OOIP >7.8 billion barrels Uinta Basin OOIP >8.2 billion barrels Viewfield Bakken Flat Lake Shaunavon Uinta Basin Divide Burke ~170,000 net acres ~12,000 boe/d Williams Mountrail Core Area McKenzie Largest producer in SW Saskatchewan Operating largest waterflood program Production as at Q3/16. USA border Third largest producer and most active driller in 2016 Highest number of zones tested to date horizontally CPG lands Largest Canadian producer and among top five largest in Williston Basin Operating largest waterflood program 3

4 PRELIMINARY 2017 BUDGET Preliminary 2017 Budget - $1.4 billion ~177,000 boe/d ~175,000 boe/d 8% Growth 5% Growth ~164,000 to ~166,000 boe/d 2016 Exit 2017 Exit Increased Q growth capital by ~$150 million ~170,000 boe/d of production expected in Q versus Q Growth capital of $450 million expected to be spent during Q Flexibility in capital spending with the opportunity to increase capital ~$50 million increase in cash flow for every WTI US$1/bbl increase 2017 Assumptions: Capital cost inflation of 5% or $60 million No corresponding production response from ~1,500 boe/d of waterflood conversions in 2016 Risked production from Uinta horizontal wells 4

5 Allocation of spend 2017 budget is preliminary Historically spent ~80% of capex in Saskatchewan This would represent $1.1B in % of capex is on drilling, completions, pumpjacks etc. 13% of capex on facilities 2016 Saskatchewan operating cost spend of approx. $560MM Spend categories include: power, taxes, surface lease rentals, chemicals, labour etc. 5

6 Oil & Gas Well Supply Chain It requires up to 100 individual and unique service and supply companies contracted through the course of drilling a well to production Source: Grant Thornton Service & Supply Outlook Report

7 Oil & Gas Well Supply Chain Source: Grant Thornton Service & Supply Outlook Report

8 Current State Cost Reductions Supplier Performance Management Failure analysis Create leading indicators for performance management Internally applying Six Sigma concepts Expectations from supply base Transparency Integrating operational efficiencies into their supply chains Technology and Innovation advancements Sustainability 8

9 INNOVATION AT CPG CPG Bakken What does innovation mean to us? 50,000 Failure analysis Create leading indicators for performance indicators 45,000 Internally applying Six Sigma concepts 40,000 35,000 Expectations from supply base Transparency 30,000 Operational efficiencies into their supply chains 25,000 Technology and Innovation Sustainability 20,000 US Oil 10,000,000 9,500,000 9,000,000 8,500,000 8,000,000 7,500,000 7,000,000 15,000 6,500,000 10,000 6,000,000 5,000 5,500,000 0 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 5,000,000 9

10 INNOVATION AT CPG What does innovation mean to us? Combination of Sustaining and Disruptive Innovation Always looking to get better at EVERYTHING that we do as well as looking at new market opportunities What have we been doing lately? Held a 2 day Management session that was all about innovation Drilled a Bakken well in less than 5 days (was 15 days 8 years ago) Introduced Lean Manufacturing concepts into the business Continued to work on IT and systems Automate wellsites E-ticketing initiatives Even looking at renewable energy 10

11 The Role of Innovation in Supply Management Innovation as a Priority Advanced Analytics/ Big Data Micro-seismic, passive seismic imaging Software and predictive technologies Digital wells, system integration Market Dojo Spend Analytics Technology Advancement Multi-stage fracturing, gellants and other drilling/fracking fluid ingredient improvements 3D printing Remote technology Operational Efficiencies Automated, wireless monitoring, next generation sensors Uberize methodologies a shared economy Payload Green Technologies 11

12 Innovation Innovation Efforts 55% of firms don t effectively recognize innovation opportunities 66% Don t have well defined innovation strategies Ineffective Innovation Efforts What is stopping them? Resource constraints (time & people) Budget constraints Lack of structured innovation processes or procedures Source: Accenture, Forrester, Supply Management Institute 12

13 INNOVATION Innovation Benefits Significant increase in revenue for top innovating companies Source: Bain, Supply Chain Management Institute, PWC 13

14 The Future of Supply Management and Innovation Major Supply Management Trends Going Digital Implement innovation and change while making sure the fundamentals are not compromised Artificial Intelligence Agility Procurement s role in Supply Management Source: 14

15 CONCLUSIONS Crescent Point has been very successful at reducing our costs We need these costs to stick Oil and gas business is not out of the woods yet We need ALL of our vendors to do similar things to what we ve done to reduce their cost basis Innovation can be very effective at reducing costs and improving profitability We can be successful together Leaders in advancing new completions and waterflood technology 15