Equinor Asa · OSL:EQNR
Equinor Asa — StatoilHydro — FY2008 Earnings Presentation
55 slides from Equinor Asa's earnings presentation, Jan 14, 2009
Slide 1: Managing through the cycle: Financial Results 4Q and full year 2008
1 Financialthrough Managing Resultsthe cycle Eldar Sætre, 4Q and full yearCFO 2008 Helge Lund President Capital and Chief markets Executive update, LondonOfficer 14 January 2009
Slide 2: Strong performance
2 Strong performance Production Unit Production Cost1 Merger Synergies (million boepd, equity) (50% realised) (USD/boe) 1.925 1.9 guiding 1.839 1.839 1.925 NOK 6bn 2007 2008 Net Operating Income New resources2 Resource Base3 (NOK bn) (million boe) (bn boe) 199 >800 ~ 20 137 <600 ~ 18 2007 2008 2005-
Slide 3: Solid Financial Results
3 Solid Financial Results Full Year NOK bn Fourth Quarter NOK bn 198.8 137.2 37.8 30.8 44.6 43.3 6.2 2.0 16.0 2007 2008 2007 2007 2008 2008 Net Operating Income Net Income Net Operating Income Net Income
Slide 4: Production growth of 5%
4 Production growth of 5% + 3% + 5% 1 2 023 1 9581 1 9252 1 950 2 1 839 1 000 boepd equity production 746 793 725 674 1213 1230 1165 1200 4Q 2007 4Q 2008 2007 2008 2009 guidance Oil Gas 1) Average PSA effect is 166 000 boepd in 4Q 2008 compared to 140 000 boepd in 4Q 2007. 2) Average PSA effect is 1
Slide 5: Improving HSE performance
5 Improving HSE performance Serious incident frequency (Number of incidents per million workhour) 4 3 2 1 0 2004 2005 2006 2007 2008 EPN* EPN* EPN* 2008 4Q07 4Q08 *Exploration & Production Norway
Slide 6: Capturing the NCS value potential
6 Capturing the NCS value potential • Record production • Seven new projects on stream • More efficient operations • Exploration success Unique Kvitebjørn pipeline repair
Slide 7: Record international production
7 Record international production • International production up 10% Equity production • Five new fields on stream Other Angola • Strengthened gas position in US Azerbaijan Algeria • Operator in Brazil Canada • Strengthened deepwater portfolio Venezuela GoM - USA 2001 2002 2003 2004 2005 2006 2007 20
Slide 8: Attractive dividend
8 Attractive dividend Dividend per STL-share NOK Share buy-back Special dividend Dividend policy Ordinary dividend Proposed special dividend 7.25* • Average payout of 45-50% Proposed ordinary dividend of Net Income (IFRS) • Grow ordinary dividend year on year 2008 dividend proposal* 2001 2002 2003 2
Slide 9: Summary
9 Summary • Strong deliveries in 2008 • Continued production growth • Improved operational performance • Attractive dividend • Firm long-term strategy
Slide 10: Financial Results
Financial Results 4Q and full year 2008 Eldar Sætre Chief Financial Officer
Slide 11: Net Income Overview 2008
11 Net Income Overview 2008 18.4 137.2 198.8 NOK bn 137.2 43.3 Net Operating Net Operating Financial Taxes Net Income Income Income Items 2008 2007 2008
Slide 12: Net Income Overview 4Q 2008
12 Net Income Overview 4Q 2008 5.9 12.1 45.1 43.7 NOK bn 23.7 2.0 Adjusted Adjusted Sum of Financial Taxes Net Income Earnings Earnings adjustments items 4Q 2008 4Q 2007 4Q 2008
Slide 13: Net Financial Items 4Q 2008
13 Net Financial Items 4Q 2008 Financial Currency (22.9) bn income Net financial items 2.9 4Q 08 (8.5) (12.1) NOK bn (14.4) Securities Financial 4.0 expenses 3.9 Currency loss on long term debt Currency swaps for liquidity and currency risk management
Slide 14: Adjusted Earnings - E&P Norway
14 Adjusted Earnings - E&P Norway 4th quarter: • Adj. Earnings down NOK 2.1 bn from 4Q 07 • Liquids price down 26% in NOK • USD/bbl down 41% 168.0 • NOK/USD up 25% • Gas transfer price up 52% 122.1 • Production increased by 3% • Liquids production up by 1% • Gas production up by 6% NOK bn • Adjustme
Slide 15: Adjusted Earnings - International E&P
15 Adjusted Earnings - International E&P 4th quarter: • Adj. Earnings down NOK 5.3 bn from 4Q 07 • Liquid prices decreased 26% in NOK 16.5 16.1 • Depreciations increased by NOK 1.5 bn NOK bn • Entitlement production down 3%, equity production up 3% • Adjustments NOK 1.9 bn for impairment and underli
Slide 16: Adjusted Earnings - Natural Gas
16 Adjusted Earnings - Natural Gas 4th quarter: 11.9 • Adj. Earnings up NOK 3.4 bn from 4Q 07 Marketing and Trading • Natural gas price up 66% NO K bn 6.1 Processing and • Strong trading result 3,3 Transportation 6.5 • Gas transfer price up 52% • NOK weakening against EUR 4.8 and USD 7.0 5.8 3.3 • A
Slide 17: Adjusted Earnings - Manufacturing & Marketing
17 Adjusted Earnings - Manufacturing & Marketing 4th quarter: 8.3 • Adj. Earnings up NOK 3.3 bn from 4Q 07 Other Energy and Retail • Strong trading result Manufacturing • Positive currency effect on 5.2 Oil sales, trading commercial storage and supply 4.2 • Successful turnaround at Mongstad NOK bn •
Slide 18: Adjusted earnings by segment 2008
18 Adjusted earnings by segment 2008 Adjusted earnings for the segments (in NOK billion) 2008 2007 E&P Norway 168.0 122.1 International E&P 16.1 16.5 Natural Gas 11.9 6.5 Manufacturing & Marketing 8.3 5.2 Other (0.4) (1.1) Adjusted Earnings for group 203.9 149.2
Slide 19: Competitive unit production cost
19 Competitive unit production cost Unit Production Cost NOK/boe • 7% cost increase since 2007 42.4 43.1 41.4 41.9 • Lower end of guided range 33.5 32.1 33.2 33.3 • Driven by increased activity 31.2 31.6 and cost inflation 4Q07 1Q08 2Q08 3Q08 4Q08 PUC* Grane gas purchase Restructuring costs *12 mont
Slide 20: Capital and exploration expenditures
20 Capital and exploration expenditures Capital expenditure Exploration activity 95 75 17.8 68 14.2 57 NOK bn 9.1 NOK bn USD ~ 16 bn 8.5 USD ~ 3.2 bn 8.7 5.7 2007 Actual 2008 Actual 2007 Actual 2008 Actual E&P Norway Natural gas E&P Norway E&P International Other E&P International Manufacturing & Ac
Slide 21: Strong cash generation and balance sheet
21 Strong cash generation and balance sheet Cash flow 2008 Net Debt to Capital Employed 5 Sale of assets 27 Dividend paid 17.5 % 25 Inorganic NOK bn Capex 12.4 % 109 66 Funds from Organic Operations* Capex Sources of funds Uses of funds 2007 2008 * Cash flows provided by operating activities after t
Slide 22: Growing resource base
22 Growing resource base Reserve Development Proved Reserves3 Resource Base1 (bn boe) 6.1 6.0 5.6 • Three year average reserve replacement ratio is 60% ~ 20bn • Reserves replacement ratio for boe 2008 is 34% 2006 2007 2008 • Resource base strengthened 3 Year Average RRR through discoveries and acqui
Slide 23: Guiding
23 Guiding • Equity production • 2009: 1.95 million boepd • 2012: 2.2 million boepd • Capex 2009: USD ~13.5bn • Exploration 2009 • Expenditures: USD ~2.7bn • Activity: 65-70 wells • Unit Production Cost • 2009-2012: NOK 33-36/boe • 2009: Upper range
Slide 24: Supplementary information
24 Supplementary information Net Operating Income per business area 25 Adjustments 26 Adjustments per segment 27 Segment taxes 28 Net financial items 2008 29 Adjusted earnings – 3Q08 vs 4Q08 30 Adjusted earnings – 4Q07 vs 4Q08 31 Adjusted earnings – 2007 vs 2008 32 Cash Flow 2008 33 Financial positi
Slide 25: Net operating income & adjusted earnings by segment 4Q
25 Net operating income & adjusted earnings by segment 4Q NOI 4Q Adjusted NOI 4Q Adjusted Business area 2008 Adjustments Earnings 2007 Adjustments earnings (NOK billions) E&P Norw ay 30.5 4.7 35.2 32.6 4.7 37.3 International E&P (1.6) 1.9 0.3 2.2 3.4 5.6 Natural Gas 7.6 (2.8) 4.8 (1.8) 3.2 1.4 Manuf
Slide 26: Items impacting net operating income
26 Items impacting net operating income 4Q08 4Q07 (NOK billions) Before tax After tax Before tax After tax Impairments -1.3 -1.3 -2.4 -1.6 INT -1.3 -1.3 -1.5 -0.9 M&M 0.0 0.0 -0.6 -0.4 NG 0.2 0.2 -0.3 -0.3 Other -0.2 -0.2 0.0 0.0 Derivatives IAS 39 -2.1 1.0 0.0 -0.6 EPN -4.7 -1.0 2.2 0.5 NG 2.5 2.0
Slide 27: Adjustments per segment
27 Adjustments per segment (NOK billions ) Before Tax Ef f ective Tax Rate Net of Tax EPN -4.7 -1.0 Derivatives (IAS39) -4.7 78.0% -1.0 Over/underlif t -0.8 78.0% -0.2 Gain/Loss on sales of assets -0.8 78.0% -0.2 Restructuring costs 1.6 78.0% 0.4 INT -1.9 -1.7 Impairment -1.3 0.0 % -1.3 Over/underli
Slide 28: Segment taxes
28 Segment taxes Tax on net operating income in: 2007 2008 4Q 2007 4Q 2008 (NOK mill) Exploration and Production Norway 92.6 125.1 24.5 22.6 International Exploration and Production 5.4 10.3 1.6 1.7 Natural Gas 1.2 8.0 -1.2 4.3 Manufactoring and Marketing 0.9 2.0 -0.7 0.6 Other 0.0 0.0 0.0 0.0 Elimi
Slide 29: Net Financial Items 2008
29 Net Financial Items 2008 Main driver: • 29% weakening of NOK vs. USD Financial (NOK 5.41 – NOK 7.00) Currency income (32.6) bn • Currency loss on long- term debt: NOK 11.2 bn 7.4 (11.2) • Currency loss from Net financial liquidity management items YTD 08 and other: NOK 21.3 bn NOK bn (18.4) (21.3
Slide 30: Adjusted Earnings – 3Q 2008 vs. 4Q 2008
30 Adjusted Earnings – 3Q 2008 vs. 4Q 2008 60 8.6 50 3.6 1.5 0.5 0.1 2.6 40 NOK bn. 30 52.4 43.7 20 10 0 3Q 2008 E&P Norway International Natural Gas Manufacturing Other Eliminations* 4Q 2008 E&P & Marketing
Slide 31: Adjusted Earnings – 4Q 2007 vs. 4Q 2008
31 Adjusted Earnings – 4Q 2007 vs. 4Q 2008 60 50 2.1 3.3 0.7 5.4 0.1 3.4 40 NOK bn. 30 45.1 43.7 20 10 0 4Q 2007 E&P Norway International Natural Gas Manufacturing Other Eliminations* 4Q 2008 E&P & Marketing
Slide 32: Adjusted Earnings – YTD 2007 vs. YTD 2008
32 Adjusted Earnings – YTD 2007 vs. YTD 2008 220 5.5 3.1 0.6 0.0 200 46.0 0.4 180 160 NOK bn. 140 120 100 203.9 80 149.2 60 40 20 0 2007 YTD E&P Norway International Natural Gas Manufacturing Other Eliminations* 2008 YTD E&P & Marketing
Slide 33: Cash flow 2008
33 Cash flow 2008 300 Change in working Change in Depreciations capital non-current Taxes and non cash items paid 250 items (4.1) 12.8 59.4 200 Income before tax (139.6) 150 Cash flows investing NOK bn activities (Net) 100 180.5 (85.8) 50 Change in Repayment liquid assets Dividend of LT paid Net ST
Slide 34: Financial position
34 Financial position Net financial liabilities Net debt to capital employed* 46.0 ** 43.8 37.5 39% 34.1 29% 2% 25.5 NOK bn 23.6 23% 20.9 20.3 21% 19% 19% 18% 12% 2001 2002 2003 2004 2005 2006 2007 2008 2001 2002 2003 2004 2005 2006 2007 2008 *Debt to capital employed ratio = Net financial liabiliti
Slide 35: Operating costs
35 Natural gas and Manufacturing & Marketing operating costs Upstream production costs Non-upstream* operating costs 33.2 33.3 31.2 31.6 32.1 8.5 29.0 1.4 6.6 2.2 6.3 0.1 Production unit cost NOK, per boe2 Operating expenses, NOK bn. 5.9 7.0 5.5 6.7 Production cost NOK bn 5.2 5.2 6.4 6.5 5.2 3Q07 4Q
Slide 36: E&P Norway production per field - 4Q 08
36 E&P Norway production per field - 4Q 08 StatoilHydro operated StatoilHydro-operated StatoilHydro share Produced volumes *1 Statfjord Unit 44.34%, Statfjord Nord 21.88%, Statfjord 1000 boed Oil Gas Total Øst 31.69%, Sygna 30.71% Brage 32,70 % 12,3 1,5 13,8 Fram 45,00 % 29,0 3,2 32,2 *2 Oseberg 49.
Slide 37: E&P Norway production per field - 2008
37 E&P Norway production per field - 2008 StatoilHydro operated StatoilHydro-operated StatoilHydro share Produced volumes *1 StatoilHydro’s share of the reservoir and 1000 boed Oil Gas Total production at Heimdal is equal to 29.87%. The Brage 32.70% 10.0 1.4 11.4 ownershare of the topside facilities
Slide 38: E&P Norway production per field - 4Q and 2008
38 E&P Norway production per field - 4Q and 2008 Partner operated 4Q 08 Partner-operated StatoilHydro share Produced volumes 1000 boed Oil Gas Total Ekofisk 7,60 % 22,8 3,9 26,8 Enoch 11,78 % 0,8 0,0 0,8 Murchison 11,52 % 0,0 0,0 0,0 Ormen Lange 28,91 % 6,7 79,1 85,8 Ringhorne Øst 14,82 % 5,2 0,2 5,
Slide 39: International E&P equity production - 4Q 2008
39 International E&P equity production - 4Q 2008 E&P International Produced equity volumes - StatoilHydro share StatoilHydro share Liquids Gas Total Alba 17,00 % 3,6 3,6 Caledonia 21,32 % 0,0 0,0 Jupiter 30,00 % 0,0 1,3 1,3 Schiehallion 5,88 % 1,9 0,0 1,9 Lufeng 75,00 % 1,6 1,6 Azeri Chiraq (ACG EOP
Slide 40: International E&P equity production - 2008
40 International E&P equity production - 2008
Slide 41: PSA effects on 2008 production
41 PSA effects on 2008 production (kboed) Governmental take 2008 • Actual PSA effect in 2008 is (kboepd) 174 000 boepd • 90% of equity production in 2008 is under PSA regulation* Realized 174 price 2008 • The PSAs (Product Sharing Agreements) split profit between the contractor group and the 0 50 10
Slide 42: Exploration StatoilHydro group
42 Exploration StatoilHydro group NOK bn. 4Q 2008 4Q 2007 Exploration expenses 1,9 1,5 Exploration expenses - Norway 2,0 3,0 Exploration expenses - International NOK bn. 4Q 2008 4Q 2007 Exploration expenditure 5,9 5,2 Exploration expenditure (activity) 0,2 0,7 Expensed, previously capitalised explor
Slide 43: Proved Reserves as of 31.12.2008
43 Proved Reserves as of 31.12.2008 Oil, NGL Oil & & Oil & NGL, Gas Oil, NGL & NGL, Gas gas mill Year mill boe mill boe gas mill boe mill boe mill boe boe UPN INT UPN INT UPN INT Total Total Total 2005 Proved reserves at end of year 1835 779 3489 248 5316 1025 2614 3737 6341 2006 Revisions and impro
Slide 44: Refining margins and methanol prices
44 Manufacturing & Marketing Refining margins and methanol prices FCC NWE refining margins Methanol contract price USD/bbl EUR/ton 2007 2008 550 14,00 500 12,00 450 400 10,00 350 8,00 300 6,00 250 200 4,00 150 2,00 100 0,00 50 J F M A M J J A S O N D J F M A M J J A S O N D
Slide 45: Dated Brent development NOK vs USD
45 Manufacturing & Marketing Dated Brent development NOK VS USD Brent Dated in US$ and NOK 160 800 140 700 120 600 100 500 NOK/bbl US$/bbl 80 400 60 300 40 200 20 100 0 0 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Brent Dated in US$ Brent Dated in NOK
Slide 46: Monthly NGL Cracks (NWE)
46 Manufacturing & Marketing Monthly NGL Cracks (NWE)
Slide 47: Reconciliation ROACE
47 Reconciliation ROACE Calculation of numerator and denominator used in ROACE calculation Twelve months ended 31 December (in NOK billion, except percentages) 2008 2007 Net income for the last 12 months 43,3 44.6 After-tax net financial items for the last 12 months 6,4 (7,2) Net income adjusted for
Slide 48: Reconciliation of overall operating expenses to production cost
48 Reconciliation of overall operating expenses to production cost
Slide 49: Normalised production cost per boe
49 Normalised production cost per boe
Slide 50: Reconciliation net debt and capital employed
50 Reconciliation net debt and capital employed
Slide 51: Forward looking statements
51 Forward looking statements This Operating and Financial Review contains certain forward-looking statements that involve risks and uncertainties. In some cases, we use words such as "believe", "intend", "expect", "anticipate", "plan", "target" and similar expressions to identify forward-looking st
Slide 52: End notes
52 End notes 1. After-tax return on average capital employed for the last 12 months is calculated as net income after-tax net financial items adjusted for accretion expenses, divided by the average of opening and closing balances of net interest-bearing debt, shareholders' equity and minority intere
Slide 53: Investor relations in StatoilHydro
53 Investor relations in StatoilHydro Lars Troen Sørensen senior vice president [email protected] +47 51 99 77 90 Morten Sven Johannessen IR officer [email protected]+47 51 99 42 01 Herlaug Louise Barkli IR officer [email protected] +47 51 99 21 38 Anne Lene Gullen Bråten IR officer a
Slide 54: StatoilHydro is an integrated technology-based international energy company
StatoilHydro is an integrated technology-based international energy company primarily focused on upstream oil and gas operations. Headquartered in Norway, we have more than 30 years of experience from the Norwegian continental shelf, pioneering complex offshore projects under the toughest conditions
Slide 55: .com.
.com. www.statoilhydra.