Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — Investor Day (November 2002)
46 slides from Bhp's investor day presentation, November 2002
Slide 1: Production & Performance: Greg Robinson, Chief Financial Officer
Next presenter ... Production & Performance: Greg Robinson Chief Financial Officer BHP Billiton Petroleum
Slide 2: Petroleum Financial Overview
Petroleum Financial Overview FY 01 FY 02 FY 02 FY 03 Full Year Full Year Qtr 1 Qtr 1 Production (MMboe) 130.9 134.2 33.6 33.1 Ave Realised Oil Price 28.04 22.58 25.32 26.97 (US$) EBIT (US$M) 1,407 1,073 325 384 EROC (%) 58 44 51 52 Capital Exp (US$M) 459 711 134 239 Exploration (US$M) 206 288 74 37
Slide 3: Petroleum FY 2002 Production by Asset
Petroleum FY 2002 Production by Asset 50.5 50.0 50 MMboes 02 Q1 03 Q1 Total Production 130.9 134.2 40 Australia/Asia Gas 44.0 47.6 Liquids 86.9 86.6 MMboe 30 26.8 25.2 UK/Middle East/Africa 20 18.0 14.8 14.6 Americas 9.7 9.2 9.0 8.4 10 7.2 6.8 6.1 6.4 0.5 0.4 0.0 0 01 02 01 02 01 02 01 02 01 02 01 0
Slide 4: Petroleum Quarterly Production Comparison for Assets
Petroleum Quarterly Production Comparison for Assets 16 14.014.2 MMboes 02 Q1 03 Q1 14 Total Production 33.6 33.1 12 Australia/Asia Gas 12.0 12.1 Liquids 21.6 21.0 MMboe 10 8 7.3 6.6 UK/Middle East/Africa 6 4.2 Americas 4 3.0 2.9 2.7 1.8 2 1.3 1.4 1.3 1.3 0.9 1.4 1.5 0.5 0.5 0 02 03 02 03 02 03 02 0
Slide 5: Petroleum Production by Product
Petroleum Production by Product 80 Production (MMboe) 74.2 72.7 FY 01 FY 02 70 Total – 130.9 134.2 60 Gas % – 33.6% 35.5% 50 Liquid % – 66.4% 64.5% 40 FY 30 37.8 01 20 34.5 FY 10 0 9.5 9.9 7.8 8.1 l G G 4.9 5.7 Oi LP LN te * as sa al G en nd tur Co Na * Includes Ethane
Slide 6: FY 2002 – Bass Strait Overview
FY 2002 – Bass Strait Overview • Bass Strait JV began producing 1968 • Bass Strait represents nearly 40% of Petroleum’s business • FY 2002 higher oil production due to West Tuna infill drilling program and higher customer demand for gas volumes Net Reserves (2P) 600 MMboe BHPB Interest 50% (non-oper
Slide 7: Bass Strait Financials
Bass Strait Financials FY 01 FY 02 FY 02 FY 03 Full Year Full Year Qtr 1 Qtr 1 EBIT (US$M) 542 410 124 156 Capex (US$M) 55 109 21 41 Net Production 50.5 50.0 14.0 14.2 (MMboe)
Slide 8: FY 2002 – Bass Strait Highlights
FY 2002 – Bass Strait Highlights Upgrading Infrastructure Licence Northern Northern Margin Survey VICTORIA Margin 3D 3D West West Tuna Tuna Infill Infill Program Program && • Longford Plant Restoration – Oil Field Survey Tuna work-overs Tuna work-overs circa US$300M gross over 5 years Gas Field Acqu
Slide 9: FY 2002 – North West Shelf Overview
FY 2002 – North West Shelf Overview • SPAs being finalised with five Japanese customers • NWS Venture committed to ongoing investment • Train 4 under construction: - 4.2 mtpa - 42 inch, 135 km trunkline - One LNG shipping carrier - Start-up mid 2004 - Gross capex US$1.4 billion Net Reserves (2P) 590
Slide 10: North West Shelf Financials
North West Shelf Financials FY 01 FY 02 FY 02 FY 03 Full Year Full Year Qtr 1 Qtr 1 EBIT (US$M) 481 408 121 153 Capex (US$M) 43 75 22 33 Net Production 25.2 26.8 6.6 7.3 (MMboe)
Slide 11: FY 2002 – Laminaria/Corallina Overview
FY 2002 – Laminaria/Corallina Overview • Stage 2 enhancement project completed – two infill wells • Higher oil production than expected due to better reservoir performance • Peak production reached FY 2001 • Declining production from 2004 Net Reserves (2P) 24 MMbbl gross BHPB Interest Laminaria – 32
Slide 12: Other Australia/Asia Region Financials
Other Australia/Asia Region Financials FY 01 FY 02 FY 02 FY 03 Full Year Full Year Qtr 1 Qtr 1 EBIT (US$M) 362 177 59 56 Capex (US$M) 13 52 4 9 Net Production 24.4 17.8 4.7 4.8 (MMboe) Includes Laminaria/Corallina, Griffin, Pakistan and Buffalo (FY 01 only)
Slide 13: FY 2002 – Liverpool Bay Overview
FY 2002 – Liverpool Bay Overview • Our largest operated asset, comprising five offshore oil and gas fields in Irish Sea • Produces 2.4% of UK oil and 2.8% of UK gas • Good HSE Performance • Record production in FY 2002 • Continued focus on maximising production volumes and reducing cost base Net Res
Slide 14: FY 2002 – Bruce and Keith Overview
FY 2002 – Bruce and Keith Overview Licence Shetland Bruce Oil Field Gas Field Oil Pipeline Islands • First production 1993 Gas Pipeline Terminal Bruce / Keith • Gas sales contract renegotiated Block • Infill drilling completed – more INE Orkney 9/8a planned for FY 2003 EL PIP Islands IGG FR Keith •
Slide 15: UK / Middle East / Africa Region Financials
UK / Middle East / Africa Region Financials FY 01 FY 02 FY 02 FY 03 Full Year Full Year Qtr 1 Qtr 1 EBIT (US$M) 255 252 64 38 Capex (US$M) 173 289 65 66 Net Production 23.6 26.4 5.5 4.0 (MMboe) Includes Liverpool Bay, Bruce and Keith
Slide 16: FY 2002 – Typhoon Overview
FY 2002 – Typhoon Overview Typhoon • BHPB – 50% interest • Production commenced July 2001 • Topsides of mini-tension leg platform being modified to handle Boris production Boris • BHPB – 50% working interest; operator • Completing Boris-1, installing flowline and umbilical hookup • First production
Slide 17: Typhoon near-field and other opportunities
Typhoon near-field and other opportunities Mahogany EB 910 StoneCold Agate EB 947 EWING BANK Arnold Graupel EB 991 Sunday Silence EB 1006 GC 18 Boxer Navarro GC 650 El Toro 0’ 0’ GC 60 150 200 GC 82 Bullwinkle Stellaria Marquette Bison Shasta Natasha Rocky Angus Popeye Monsoon Brutus Rio Jolliet May
Slide 18: Americas Region Financials
Americas Region Financials FY 01 FY 02 FY 02 FY 03 Full Year Full Year Qtr 1 Qtr 1 EBIT (US$M) 55 84 18 29 Capex (US$M) 166 186 22 90 Net Production 7.2 13.2 2.8 2.8 (MMboe) Includes Typhoon, GoM and Bolivia
Slide 19: Petroleum FY 2002 EBIT by Producing Asset
Petroleum FY 2002 EBIT by Producing Asset 500 410 408 400 300 252 200 177 100 84 0 Bass Strait North West Aust/Asia UK / Middle Americas Expln / Bus Overheads -100 (Aus) Shelf (Aus) Other East / Dev -86 Africa -200 -172 -300 FY 02 EBIT US$1,073 million
Slide 20: Petroleum Efficiency Targets
Petroleum Efficiency Targets US$/boe FY 06 Target FY 02 Actual* Finding Costs 1.50 1.29 Finding & Development 4.50 4.08 EBIT 6.00 9.20 * Three year average
Slide 21: Exploration – Capitalised vs Expensed
Exploration – Capitalised vs Expensed 300 Capitalised 250 Expensed 137 200 62 US$M 150 35 100 118 144 151 50 16 21 0 FY 00 FY 01 FY 02 FY 03 Qtr 1
Slide 22: Petroleum Operating Margin
Petroleum Operating Margin 30 Realised Oil Price 25 20 US$ 15 10 Opex & Secondary Taxes / Boe 5 Opex / Boe 0 FY 98 FY 99 FY 00 FY 01 FY 02 FY 03 Qtr1
Slide 23: EBIT Margin vs Production
EBIT Margin vs Production Average Realised Oil Price (3): 14 160 13.20 22.43 28.04 22.58 26.97 12 140 120 EBIT Margin (US$ / Boe) 10 Production (MMboe) 100 8 80 6 60 4 40 2 20 0 0 1999 (2) 2000 2001 2002 2003 Qtr 1 Liquids Gas EBIT Margin per Boe (US$ / Boe) Note 1: all years EBIT results 12 months
Slide 24: Development Expenditure vs Depreciation, Depletion & Amortisation
Development Expenditure vs Depreciation, Depletion & Amortisation 800 Capex 711 700 DD&A 600 571 512 521 500 500 448 465 440 459 US$M 400 300 273 239 200 133 100 0 FY 98 FY 99 FY 00 FY 01 FY 02* FY 03 Qtr1* * Includes investment expenditure in GoM infrastructure
Slide 25: Margin Analysis – FY 2002
US$/boe 0 5 10 15 20 25 Turnover 2,815 Operational Costs 463 DDA 570 Secondary 471 Taxes Margin Analysis – FY 2002 Operating 1,311 EBIT Growth 168 Other Non- Operating 70 Expenses EBIT 1,073 Tax / 377 Interest NOPAT 696
Slide 26: Petroleum Relative to the Industry Players
Petroleum Relative to the Industry Players Annual Production Proven Reserves 1. ExxonMobil 1. ExxonMobil 2. Shell 2. Shell 3. BP 3. BP 4. ChevronTexaco 4. ChevronTexaco 5. TotalFina Elf 5. TotalFina Elf 6. ConocoPhillips 6. ConocoPhillips 7. ENI 7. ENI 8. Repsol-Ypf 8. Repsol-Ypf 9. Encana 9. Anadar
Slide 27: Peer Group Benchmarking
Peer Group Benchmarking BHP Billiton Petroleum’s Peer Group Ranking 3 year averages to 1998/99 and 2001/02 $6.94/boe 24.9% 100% top quartile performance $3.62/boe $4.08/boe 75% $1.29/boe 2001/02 129% 9.9% 5.8% pa 50% $4.80/boe $1.74/boe 125% 25% 1998/99 -2.3% pa 0% Profit Margin Costs Capital Growth
Slide 28: Exploration & Business Development: Steve Bell
Next presenter… Exploration & Business Development: Steve Bell President Exploration & Business Development BHP Billiton Petroleum
Slide 29: Exploration Turns Ideas into Money
Exploration Turns Ideas into Money I -Idea D -Discovery R A -Appraised discovery V V -Developed field A R -Reserve additions CD -Capital destruction Value CD I D Time • The greatest leap in value is to turn an idea into an appraised discovery • We are in the business of turning ideas into money
Slide 30: Current Exploration Acreage Portfolio
Current Exploration Acreage Portfolio Gulf of Trinidad Brunei Mexico Gabon North & West Brazil Australia South Africa Bass Strait
Slide 31: Challenges unique to our portfolio
Challenges unique to our portfolio • Different kind of wildcatter – not a drilling program focused company • Heavily weighted to deepwater exploration • Longer lead times between discovery/appraisal wells • Lumpy portfolio for booking reserves
Slide 32: Deepwater Gulf of Mexico Potential – still a long way to go
Deepwater Gulf of Mexico Potential – still a long way to go Bboe Cumulative Resource MMboe Average Size / Discovery 16 250 Estimates of ultimate 14 potential range from 30 - 50 Bboe 200 12 10 150 14.6 Bboe 8 Avg Discovered 100 93 MMboe 6 To date 4 50 2 0 0 Cumulative Discoveries 1976 - 2001 1976 - 2
Slide 33: Indicative Margin Analysis
Indicative Margin Analysis WD 6,500 ft, Field Reserve 500 MMboe $US/bbl Nominal 25.00 20.00 7.18 Profit 3.19 3.15 Quality & Gas Content 15.00 1.20 3.15 3.15 5.45 Government Take 10.00 3.06 1.56 4.17 4.17 4.30 OPEX & Transportation 5.00 3.93 3.93 3.93 Appraisal & Development 1.00 1.00 1.00 Exploratio
Slide 34: Gulf of Mexico Exploration Program has DELIVERED
Gulf of Mexico Exploration Program has DELIVERED Discoveries Typhoon 20 Deepwater Atlantis 4 Flex Trend Mad Dog • 21% commercial success Pluto to date (38% if 24 Exploration Boris opportunities under Neptune evaluation included) Cascade Frampton 40 Wells Bass Lite 16 Projects Appraisal • 1 sanctione
Slide 35: Our Gulf of Mexico Lease Acquisition Costs vs Peers
Our Gulf of Mexico Lease Acquisition Costs vs Peers $3,000,000 Lease Acquisition Costs / Leases Acquired (Net) 3 Year Moving Average [1.14] $2,500,000 $2,000,000 $1,500,000 Median $1,000,000 Best Quartile $500,000 $0 BHP Billiton A B C D E F G Company Source: E&Y GoM Benchmarking Study
Slide 36: Gulf of Mexico Deepwater Performance Post 1995
We have competed very strongly in the Gulf of Mexico Deepwater Performance Post 1995 40 Full Cycle IRR Post 1995 % 35 Pioneer High Return 30 Lacking Scale Successful Independents Murphy Shell 25 Nexen Occidental Spinnaker Dominion Kerr-McGee BHPB BP $10B, 24% 20 Marathon /Oryx Mariner Ocean ENI 15 E
Slide 37: Our Gulf of Mexico Deepwater Leasehold Ranking - September 2002
Our Gulf of Mexico Deepwater Leasehold Ranking - September 2002 Number of Leases 700 600 500 400 300 200 100 0 BP I PB EN al el o ee il ss oc rgy Sh ark BH ob co s cG illip He Un xa nM ne ad rr M Ph Te da nE An xo co ron era Ke Ex ea no Am ev Oc Co Ch
Slide 38: Our Drilling Activities in the next 12 – 18 months
Our Drilling Activities in the next 12 – 18 months Tiger Habanero Kansas Mississippi Canyon Drilling Vortex Shenzi Drilling Drilling Typhoon Boris Atwater Valley Mad Dog Atlantis Neptune 4 Green Canyon Chinook Gas Field Cascade 2 Oil Field Walker BHPB Acreage Ridge BHPB Operated in Red
Slide 39: Brunei Block J Offshore Acreage
Brunei Block J Offshore Acreage Brunei Block J BRUNEI 0 50km MALAYSIA
Slide 40: Brazil Offshore Acreage
Brazil Offshore Acreage Vitoria B R A Z I L BM-C-24 Niteroi 0 50km RIO DE JANEIRO
Slide 41: West Africa/South Africa Exploration
West Africa/South Africa Exploration North Tolo Gabon Otiti GABON Kwanza Block 21 Basin Block 22 ANGOLA 3B/4B SOUTH AFRICA 0 500km
Slide 42: Summary – On Track To Adding Value
Summary – On Track To Adding Value • Built substantial competitive position in GOM • 15-35 Billion BOE undiscovered potential remaining in deepwater GOM • Value delivery on schedule from major projects • Strong exploration capability • Quality prospect inventory
Slide 43: Conclusion & Questions: Philip Aiken
Next presenter … Conclusion & Questions: Philip Aiken President & Chief Executive Officer BHP Billiton Petroleum
Slide 44: Our Business Priorities
Our Business Priorities • Maximise existing value from current portfolio • Deliver projects in progress • Sanction and develop projects in pipeline • Create new opportunities through our three growth strategies • Continue to improve our HSEC performance
Slide 45: Conclusion
Conclusion • Petroleum is a value driver for BHP Billiton • Petroleum is a differentiating factor for BHP Billiton • BHP Billiton Petroleum is a well established oil and gas business with: – solid performance – strong producing assets – value adding growth opportunities – consistent strategic direct
Slide 46: Ohpobilliton
6de Ohpobilliton