Equinor Asa · OSL:EQNR
Equinor Asa — Statoil — FY2013 Earnings Presentation
36 slides from Equinor Asa's earnings presentation, Feb 7, 2014
Slide 1: Balancing returns and growth
Balancing returns and growth London, 7 February 2014 Torgrim Reitan, Executive Vice President and Chief Financial Officer
Slide 2: Forward-looking statements
Forward-looking statements This presentation material contains certain forward-looking statements that involve risks and uncertainties. In some These forward-looking statements reflect current views about future events and are, by their nature, subject to cases, we use words such as "aim", "ambition
Slide 3: 2013 | Strategic progress, good operations
2013 | Strategic progress, good operations Earnings Stable cost development, earnings impacted by divestments Production As expected Reserves 147% organic RRR Resources 1250 million boe added from exploration Projects On cost and schedule Portfolio USD 4.1 bn in proceeds from announced divestments D
Slide 4: Adjusted earnings
Adjusted earnings Full year 2013 Fourth quarter 2013 NOK bn NOK bn 39.2 155.5 7.6 163.1 (116.7) 46.4 14.8 43.9 (1.6) 42.3 (31.3) 11.0 -44% -25% -16% -16% +14% -4% -12% -27% Net income Reported Adjustments Adjusted Tax on adj. Adjusted Net income Reported Adjustments Adjusted Tax on adj. Adjusted NOI
Slide 5: Strong cost focus across the business
Strong cost focus across the business Statoil Group 1) D&P Norway D&P International MPR Strategic progress and Execution on track Record production, Continued strong world-class exploration impacted by US onshore gas results Bay du Nord: World’s largest Åsgard subsea compression: Shah Deniz II: Sanc
Slide 6: Production as expected
Production as expected • Record international production Equity production mboe/d • Impacted by divestments and 1945 2032 1940 2004 redetermination • Unchanged decline at 5% 910 825 858 867 1087 1122 1115 1137 4Q2013 4Q2012 YTD2013 YTD2012 Oil Gas 6
Slide 7: Cash flow 2013
Cash flow 2013 NOK bn Cash flow from • Impacted by lower operating volumes and Taxes paid activities 219 1) downstream margins (114) • Tax payments affected Proceeds Cash flows from sale of to organic by 2012 earnings Dividend paid assets investments • Investments in line 27 (114) (22) with guiding
Slide 8: Record reserve replacement
Record reserve replacement • Highest organic SEC RRR ever bn boe 1.3 22 (0.7) 22 − 147% organic RRR (0.5) − 128% total RRR − 119% three-year organic average RRR • Added resources 2x production through 0.9 5.4 5.6 exploration and IOR (0.6) (0.1) 2012 Production Divestments Discoveries, 2013 acquistio
Slide 9: Capital markets update: Balancing returns and growth
Capital markets update: Balancing returns and growth High value growth Increase efficiency Prioritise capital distribution Organic free cash flow to Expected annual savings of Competitive direct returns cover dividends from 2016 1) USD 1.3 bn from 2016 2013 dividend at NOK 7.00 4) Capital
Slide 10: High grading the portfolio
High value growth High grading the portfolio Start-ups pre-2020 Optimising/future 1) Divested/reduced 1) • High profitability • Improvement potential • Low strategic fit • Strategic fit • Return on capital • Return on capital • Market attractiveness Non-sanctioned Non-sanctioned Non-sanctioned • Joh
Slide 11: Directing our capital to priority projects
High value growth Directing our capital to priority projects Strengthening profitability Investing in high value growth IRR 1) (USD 100/bbl / capex-weighted) Capex vs. IRR 24% 20 16% 15 • Capital directed to high USD bn 10 value projects 5 0 • Next wave of investments Profitability index 2) (NPV/tot
Slide 12: Growth projects to deliver higher returns
High value growth Growth projects to deliver higher returns Moving from good profitability… … to performance well ahead of peers Projects under development Probable development projects 25 25 Average IRR % Average IRR % 20 20 15 15 10 10 Peer average Statoil Peer average Statoil Analysis based on Wo
Slide 13: Reducing cost and improving efficiency
Increase efficiency Reducing cost and improving efficiency Strong starting point with low Launching improvement initiatives with relative Unit Production Cost 1) expected annual savings of USD 1.3 bn from 2016 1.5 Delivering capex improvements Statoil • Reduce modification capex by 20% 0.3 • Potenti
Slide 14: Strong commitment to capital distribution
Prioritise capital distribution Strong commitment to capital distribution Net debt reduced Firm dividend policy Firm financial framework from 27% to 15% with quarterly payouts • Strong balance sheet will be maintained − A-category rating on stand-alone basis − Net debt/capital employed 15-30% Net de
Slide 15: Organic FCF covers dividend from 2016
Prioritise capital distribution Organic FCF covers dividend from 2016 1) Strong expected average cash flow 2014-2016 Stable capital expenditure outlook USD bn 25 • 2014: USD ~20 bn organic capex ~22 ~20 • 2014-16: USD ~20 bn organic capex 20 • Investing for profitable growth 15 − ~45% NCS − ~60% liq
Slide 16: Delivering ~3% organic production CAGR 2013-16
Balancing returns and growth Delivering ~3% organic production CAGR 2013-16 Equity production 1) 2) (mmboed) 2100 New • 2% increase in production from 2013 (rebased) to 2014 1900 1940 New 1850 • 3% production CAGR from Divestments/ 2013-16 redeterminations 1700 Existing Existing3) • Strong line-up o
Slide 17: Maintaining returns from 2013
Balancing returns and growth Maintaining returns from 2013 Strong performance on Stable returns at USD 100/bbl ROACE compared to peers 1) Adjusted ROACE 14% 11.8% 12% • Top quartile on ROACE Statoil 10% • Next wave of projects even 8% more profitable 6% • Reducing cost and improving efficiency 4% 2%
Slide 18: Summary – Balancing returns and growth
Summary – Balancing returns and growth 2014 2014-2016 Key message USD 5 bn reduction 2014-16 Capex USD ~20 bn USD ~20 bn Free cash flow positive from 2016 USD ~3.5 bn Exploration ~20 high impact wells Continuing significant exploration ~50 wells ROACE ~2013 level ~2013 level Maintaining retu
Slide 19: Thank you
Thank you
Slide 20: Supplementary Information
Supplementary Information Investing for profitable growth 21 Sensitivities – Indicative effects on 2013 results 32 2013 - Good cost control 22 Indicative PSA effect 33 Items impacting net operating income 23 Reconciliation of Adjusted Earnings to Net Operating Income 34 Tax rate reconciliation 24 Fo
Slide 21: Investing for profitable growth
Balancing growth and returns Investing for profitable growth Investment profile 2014-16 100 % • 2014: ~ USD 20 bn MPR and MPR and Exploration Other Other organic capex Non- Non-OECD Rest sanctioned 80 % of world New assets Gas E&P INT • 2014-16: ~ USD 20 bn 60 % North organic capex America 40 % Sanc
Slide 22: 2013 – Good cost control
2013 – Good cost control 1) 1) Focus on cost New production increases DD&A Strengthening our Adjusted opex and SG&A, NOK bn Adjusted DD&A, NOK bn competitiveness • Project prioritisation 2) 5.8 2) 4.8 2) 4.9 5.4 • Standardisation and 4.5 8.5 6.6 6.9 7.9 industrialisation 6.5 7.6 7.9 8.7 • Utilising
Slide 23: Items impacting net operating income 4Q 2013
Items impacting net operating income 4Q 2013 23
Slide 24: Tax rate reconciliation 4Q 2013
Tax rate reconciliation 4Q 2013 Adjusted Tax on adjusted Composition of tax expense and effective tax rate Tax rate earnings earnings D&P Norway 35.4 (26.6) 75% D&P International 3.6 (3.1) 86% Marketing, Processing & Renewable energy 3.7 (2.0) 54% Other (0.3) 0.4 124% Total adjusted earnings 42.3 (3
Slide 25: Net Financial Items 4Q 2013
Net Financial Items 4Q 2013 Interest income and Net foreign exchange other financial items gains/losses Interest and other Net financial items finance expenses 4Q 13 0.7 (1.4) Gains/losses NOK (1.7) derivative financial bn instruments (4.1) (1.7) 25
Slide 26: Development in net debt to capital employed
Development in net debt to capital employed Net financial liabilities Net debt to capital employed 1) (NOK bn) 100.0 14.1** 30 % 80.0 86.2 26 % 3%** 77.4 76.0 8.3 2) 20 % 21 % 21 % 60.0 63.7 62.3 1% 2) 14.1 2) 16 % 15 % 40.0 45.1 3% 2) 12 % 37.8 10 % 10 % 20.0 0.0 0% 2010 2011 2012 1Q 13 2Q 13 3Q 13
Slide 27: Long term debt portfolio
Long term debt portfolio Redemption profile 31.12.2013 27
Slide 28: MPR Adjusted Earnings - Break-down
MPR Adjusted Earnings - Break-down 3.7 5.1 28
Slide 29: Statoil production per field 4Q 2013
DPN Statoil production per field 4Q 2013 DPN - Statoil operated Statoil share Produced equity volumes - Statoil share DPN - Partner-operated Statoil share Produced equity volumes - Statoil share 1000 boed Liquid Gas Total 1000 boed Liquid Gas Total Alve 85.00% 5.3 7.4 12.7 Vilje 28.85% 6.4 0.0 6.4 B
Slide 30: Statoil production per field 4Q 2013
DPI & DPNA Statoil production per field 4Q 2013 DPI Produced equity volumes - Statoil share DPNA Produced equity volumes - Statoil share 1000 boed Statoil share Liquids Gas Total 1000 boed Statoil share Liquids Gas Total ACG 8.56% 54.2 54.2 Marcellus* Varies 6.3 110.0 116.3 Agbami 20.21% 48.5 48.5 B
Slide 31: Exploration Statoil Group
Exploration Statoil Group Exploration Expenses Fourth quarter For the year (in NOK billion) 2013 2012 2013 2012 Exploration Expenditure (Activity) 5,7 4,9 21,8 20,9 Capitalised Exploration -2,4 -0,6 -6,9 -5,9 Expensed from Previous Years 1,2 0,3 1,9 2,7 Impairment/Reversal of Impairment 0,4 0,0 1,2
Slide 32: Sensitivities – Indicative effects on 2014 results
Sensitivities1) – Indicative effects on 2014 results NOK bn Oil price: 8 + USD 10/bbl 20 Gas price: 7 + NOK 0.50/scm 21 Exchange rate: 8 USDNOK +0.50 20 Net income effect Net operating income effect before tax The sensitivity 1) analysis The sensitivity shows analysis showsthe estimated the estimate
Slide 33: Indicative PSA effects
Indicative PSA effects Assumed oil price 2014 $110/bbl 160 $80/bbl 140 0 100 200 (1000 boe/d) 33
Slide 34: Reconciliation of Adjusted Earnings to Net Operating Income
Reconciliation of Adjusted Earnings to Net Operating Income Items impacting net operating income Fourth quarter For the year ended (in NOK billion) 2013 2012 2013 2012 Net operating income 43.9 45.8 155.5 206.6 Total revenues and other income (2.3) 2.2 (4.9) (9.8) Change in Fair Value of derivatives
Slide 35: Forward-looking statements
Forward-looking statements This presentation material contains certain forward-looking statements that involve risks and uncertainties. In some These forward-looking statements reflect current views about future events and are, by their nature, subject to cases, we use words such as "aim", "ambition
Slide 36: Investor Relations in Statoil
Investor Relations in Statoil Investor Relations Europe Hilde Merete Nafstad Senior Vice President [email protected] +47 95 78 39 11 Lars Valdresbråten IR Officer [email protected] +47 40 28 17 89 Erik Gonder IR Officer [email protected] +47 99 56 26 11 Gudmund Hartveit IR Officer [email protected] +4