Norsk Hydro ASA · OSL:NHY
Norsk Hydro ASA — Investor Day (December 2002)
23 slides from Norsk Hydro ASA's investor day presentation, Dec 9, 2002
Slide 1: Capital Markets Day 2002 Hydro Oil & Energy
Capital Markets Day 2002 Hydro Oil & Energy z Growth z Performance Executive Vice President Tore Torvund Oslo, December 9, 2002
Slide 2: Twin paths to create value
2 Twin paths to create value z Exploration and Production opportunities z Positioning in the European energy market 40374 - 11.2002 - * 2 - Hydro Media
Slide 3: Major energy player in Europe
3 Major energy player in Europe* z Norway 52% of proven oil reserves 27% of proven gas reserves 31% of hydroelectric power production 1% of population z Norsk Hydro Operate 1.2 million boe/day on NCS Hydroelectric power generation 8.5 TWh Largest energy consumer in Europe * EU15+Norway
Slide 4: Competitive production growth
4 Competitive production growth 1 000 boe/day 700 R * 8% 600 CAG 500 400 300 200 100 0 1998 1999 2000 2001 2002E 2003E 2004E 2005E 2006E Norwegian fields International SAGA acquisition SDFI acquisition * Compound Annual Growth Rate, 2001 baseline 40374 - 11.2002 - * 4 - Hydro Media
Slide 5: New fields on stream 2003-2006
5 New fields on stream 2003-2006 Hydro share boe/day Development Jasmim 4 000 International activity PDO Submittal PDO Approval/ Dalia 20 000 Sanctioning Rosa/Lirio 12 000 Start Production Kharyaga 2+3 18 000 (phase 1-3) Murzuq A-field 4 000 NCS Operator Grane 77 000 Fram Vest 15 000 Visund gas phas
Slide 6: Continued focus on cost discipline
6 Continued focus on cost discipline Outlook 2003-20061 z Investments: NOK 12 billion/year z Operating cost level2: Maintain at today’s level z Grane on track for 2003 Q3 start-up Budget reduced by 1) Excl. Exploration NOK 1 billion 2) Field Production costs + depreciation and abandonment + ne
Slide 7: Ormen Lange – planned production 2007
7 Ormen Lange – planned production 2007 O rm e n z Reserves: 375 bcm La n g e z Gas Production 15-20 billion Sm3/year z Hydro share 18% z PDO planned 2003 z Deepest water development on NCS to date z Investment Field NOK 35-40 billion Pipelines NOK 5-17 billion
Slide 8: Access to attractive acreage
8 Access to attractive acreage International Alliances: Potential projects: E&P strategy: Canada Canada Petro-Canada Hebron & Annapolis z Priority to oil prospects Angola Angola Sonangol Further z Based on NCS developments operator competencies Iran Iran NIOC Anaran z Alliance with Libya Libya regio
Slide 9: Exploration options with low future commitments
9 Exploration options with low future commitments NOK million Exploration activities outside Norway 2 000 Gulf of Mexico Canada: Flemish Canada: Scotian Shelf 1 000 Iran: Anaran Options Angola: Block 34 & 25 Canada: Grand Banks Libya: Murzuk Angola: Block 17 0 1996 1997 1998 1999 2000 2001 2002E 200
Slide 10: Discoveries made in 2002
10 Discoveries made in 2002 Country Exploration well Hydro Discovery share Canada Annapolis 25% Gas Hibernia & Terra Nova 5-15% Evaluation ongoing Libya Block 190 B1 (P-17) 20% Oil Block 186 D2 (DEL-1) 20% Oil Block 186 D3 (DEL-2) 20% Oil Angola Block 17 10% Evaluation ongoing Norway PL 050 (34/10-4
Slide 11: Substantial exploration in 2003
11 Substantial exploration in 2003 Major exploration wells NOK million Location Hydro Status share 2 500 USA – 25% 2 wells Q1, Gulf of Mexico new options 2 000 Canada – Delineation Annapolis 25% well Q4 1 500 Canada – 33% 2 wells Q1-2 Flemish Pass Iran – 100% 2 wells Q1 1 000 Anaran Angola – 30% 1 w
Slide 12: European Energy Market – offers new opportunities
12 European Energy Market – offers new opportunities Abolishment of GNC Norwegian gas Shtokman positioning Russian gas Long run marginal Liberalization process cost delivered to UK (NBP) Øre/Sm3 100 Industry 80 60 restructuring 40 20 0 Ormen Yamal- Qatargas 2 Lange Nenets Source: Wood Mackenzie (Dec
Slide 13: Strong and flexible gas position in Europe
13 Strong and flexible gas position in Europe Åsgard z Strong growth in equity Ormen Lange production z Ormen Lange – large Troll uncommitted volumes Oseberg z Access to several landing Sleipner points St.Fergus z Diversified customer portfolio Emden Bacton Sluiskil Zeebrügge 40374 - 11.2002 - * 13
Slide 14: Energy markets towards integration
14 Energy markets towards integration Supply Supply Gas E&P E&P Pipes Pipes Trading Trading Wholesale Wholesale Retail Retail Converging gas and power markets Power Supply Power generation Wires Wires Trading Wholesale Retail Hydro participates selectively in the gas and power value chains 40374 - 1
Slide 15: Commercial track record
15 Commercial track record Contribution margin – Trading NOK million z Active player at gas hubs 700 since market opening 600 500 400 z Nordpool experience in power trading 300 200 100 z Active portfolio management 0 -100 1999 2000 2001 YTD Q3 2002 Power Crude Oil & Oil Products Gas Liquids Natural
Slide 16: Capital Markets Day 2002 Hydro Oil & Energy
Capital Markets Day 2002 Hydro Oil & Energy z Growth z Performance Executive Vice President Tore Torvund Oslo, December 9, 2002
Slide 17: Strong production growth
17 Strong production growth 1 000 boe/day 510 500 470 455 430 421 ● 12% production growth 400 2001-2002 including SDFI 300 ● Production target for 2003 510 000 boe/day 200 100 0 2001 2002E 2002E 2002E 2003E January incl. December SDFI Oil Norw. shelf Oil int. Gas 40374 - 11.2002 - * 17 - Hydro Media
Slide 18: Both oil and gas production are growing
18 Both oil and gas production are growing 1 000 boe/day 700 A GR* 8% C 600 500 400 300 200 100 0 2001 2002E 2003E 2004E 2005E 2006E Oil Gas * Compound Annual Growth Rate, 2001 baseline 40374 - 11.2002 - * 18 - Hydro Media
Slide 19: F&D costs tracking down towards target
19 F&D costs tracking down towards target F&D costs excl. sale & purchase 250 20 17.5 Reserve Replacement (%) 200 F&D costs (USD/boe) 15 150 12.5 100 10 7.5 50 5 0 2.5 -50 0 1995 1996 1997 1998 1999 2000 2001 2002E2003E Res. replacement F&D (3-year roll) F&D target Reserves changed from P80 to P90 i
Slide 20: Strong performance in operations
20 Strong performance in operations Company Platform Troll C Troll B Oseberg A Oseberg East Top 25% Snorre/Vigdis Oseberg C Njord Oseberg South Visund Brage Average 0 10 20 30 40 50 0 20 40 60 80 100 NOK/boe NOK/boe Benchmark of Norway and UK Central North Sea Source: McKinsey, June 2002 40374 - 11.
Slide 21: Financial and operating targets for 2003
21 Financial and operating targets for 2003 z Production target 510 000 boe/day z Operating cost NOK 82/boe (excl. exploration) z F&D costs USD 5/boe (3 year average) z Reserves Replacement Ratio 140% (3 year average) z CAPEX level NOK 11.5 billion z Exploration level NOK 1.9 billion 40374 - 11.2002
Slide 22: Key Messages
22 Key Messages z Strong organic E&P growth CAGR of 8% extended through 2006 More projects to come on stream 2007 onwards z Substantial exploration portfolio to be tested 2003 Exploration strategy to be evaluated prior to new commitments z Building strength in liberalizing European energy mark
Slide 23: Safe harbour statement
23 Safe harbour statement In order to utilize the "Safe Harbour" provisions of the United States Private Securities Litigation Reform Act of 1995, Hydro is providing the following cautionary statement: This presentation contains certain forward-looking statements with respect to the financial condit