Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — Investor Presentation (December 2004)
61 slides from Bhp's investor presentation, December 2004
Slide 1: Petroleum Business Briefing
Petroleum Business Briefing December 2004
Slide 2: Disclaimer
Disclaimer The views expressed here contain information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. Any forward looking information in this presentation ha
Slide 3: Overview of Today's Briefing
Overview of Today’s Briefing • Introduction, Overview, Growth and Project Updates Philip Aiken, Group President, Energy • Production and Financial Performance Greg Robinson, Chief Financial Officer & Chief Development Officer, Energy • Exploration Steven Bell, President Exploration & Business Develo
Slide 4: BHP Billiton Energy
BHP Billiton Energy • Energy Group – Petroleum and Energy Coal Businesses • Different businesses – overseen by Energy Executive Committee but operationally managed separately • Advantages in bringing together: - Flexible response to changes in energy industry - Customers benefit from ‘one stop shop’
Slide 5: Petroleum – Overview
Petroleum – Overview FY 2004 FY 2003 Turnover (Excluding third party) $3.2 billion $3.0 billion EBIT $1.4 billion $1.2 billion Operating capital employed $4.1 billion $3.3 billion Total production 122.5 million boe 121.8 million boe Average daily production 335,000 boe per day 334,000 boe per day To
Slide 6: Reserves Trends
Reserves Trends 2500 30 2000 25 Proved R/P Ratio 20 Million boe 1500 15 1000 10 500 5 0 0 2000 2001 2002 2003 2004 Proved Probable Proved R/P (1) 1. Proved R/P ratio refers to Reserves over Production 6
Slide 7: Petroleum FY 2004 Health, Safety & Environment Performance
Petroleum FY 2004 Health, Safety & Environment Performance • BHP Billiton’s goal is zero harm to people and the environment • We are committed to continuous improvement in our HSEC performance. Over the year: - We outperformed our HSEC target - We had no major oil spills or environmental incidents •
Slide 8: BHP Billiton Petroleum – Core Purpose / Core Values
BHP Billiton Petroleum – Core Purpose / Core Values 1. Adherence to the 7. High BHP Billiton Charter 2. Delivering on what performance we say – highly through high visible Short - Med calibre people Core Purpose Term growth projects To create value through the discovery, appraisal, 6. Active 3. Focu
Slide 9: BHP Billiton Petroleum – Core Business
BHP Billiton Petroleum – Core Business A Core Business is a coherent area of business that is material to BHP Billiton, meets financial objectives, and offers a long- term span of activity and many options for reinvestment • Material for BHP Billiton • Delivers against financial objectives • Involve
Slide 10: BHP Billiton Petroleum's Goals & Aspirations
BHP Billiton Petroleum’s Goals & Aspirations 1. Fully exploit existing core businesses • Bass Strait/ Eastern Australia gas • Pacific Basin LNG/ W Australia oil & gas 2. Ensure the emergence of the Gulf of Mexico as a third core business 3. Develop a fourth core business over the coming decade • Exp
Slide 11: Petroleum – core business and current operations
Petroleum – core business and current operations North Sea Liverpool Bay London Hague Houston Pakistan Tokyo Gulf of Mexico Algeria Trinidad* Singapore North West Shelf Griffin Perth Melbourne Minerva* Bass Strait M ain Offices Gas commercialisation M arketing Offices Production Core/emerging core b
Slide 12: Petroleum – Growth Highlights
Petroleum – Growth Highlights Projects delivered • Ohanet • Zamzama Phase I • Boris-North • NWS 4th Train • ROD first oil Continued Gulf of Mexico success • Mad Dog, Atlantis (and infrastructure) developments on track • Appraisal success at Shenzi and Neptune • Puma, Starlifter discoveries • Strengt
Slide 13: Petroleum – Gulf of Mexico Projects
Petroleum – Gulf of Mexico Projects Mad Dog • On schedule for start-up in December 2004 • Production capacity* 100,000 bbl of oil; 60 MMcf of gas per day • Reserves estimate: 200-450 MMboe (gross) Atlantis • On schedule for 2006 first oil Mad Dog Spar • Production capacity* 200,000 bbl of oil; 180 M
Slide 14: Petroleum – Other Projects
Petroleum – Other Projects Angostura • On schedule for start-up December 2004 • Production capacity (nameplate) 100,000 bbl/day • Gross reserves estimate 90 – 300 MMbbl; 1 to 2.3 Tcf gas • Gas commercialisation next phase Minerva • On schedule for start-up December 2004 • 2P gas (gross) 300 Bcf; 1.2
Slide 15: Petroleum Sanctioned Delivered Projects
Petroleum /Sanctioned Delivered Projects Nameplate BHP Billiton Capacity* Start-up Capex (BHP Billiton boe/day) Zamzama Phase 1 (Pak) July 2003 $40 M 21,000 Boris (GoM) Sep 2003 $70 M 11,000 Ohanet (Alg) Oct 2003 $464 M N/A – Risk Sharing Contract North West Shelf T4 (Aus) Aug 2004 $247 M 14,500 ROD
Slide 16: New Growth Opportunities
New Growth Opportunities Gulf of Mexico • Shenzi, Neptune • Other Appraisal at Puma, Cascade and Chinook Australia • Stybarrow, Pyrenees • Scarborough/Cabrillo Port (US) • NWS Train 5 16
Slide 17: New Growth Opportunities
New Growth Opportunities Exploration (existing) • Algeria • Australia – Gippsland & Western Australia • Trinidad & Tobago • US – Gulf of Mexico • Pakistan Exploration (new test areas) • Borneo, Canadian Maritime, Brazil, South Africa New Business Development • Existing Assets • North Africa/Middle E
Slide 18: Financial and Production Performance
Petroleum Business Briefing Financial and Production Performance December 2004
Slide 19: FY 2004 Production by Asset
FY 2004 Production by Asset 15.1 8.4 47.0 NORSAT Liverpool Bay 5.3 25.8 7.1 3.8 3.4 Typhoon Algeria GoM Pakistan Producing 3.8 2.8 Griffin Laminaria NWS Bass Strait FY FY 03 03 FY FY 04 04 Gas Total Total 121.8 121.8 122.5 122.5 Liquids Gas Gas % % 38.8 38.8 44.5 44.5 Liquid Liquid % % 61.2 61.2 55.
Slide 20: WTI vs Average Realised Oil Price
WTI vs Average Realised Oil Price – US$/bbl FY 00 FY 01 FY 02 FY 03 FY 04 WTI 25.93 30.03 23.78 29.77 33.69 Average realised oil 22.86 28.04 22.58 28.14 32.24 price 50 WTI Tapis 40 $US / bbl Ave. realised oil price 30 Brent 20 10 2000 2001 2002 2003 2004 20
Slide 21: Henry Hub vs Average Realised Gas Price
Henry Hub vs Average Realised Gas Price – US$/Mcf FY 00 FY 01 FY 02 FY 03 FY 04 Henry Hub (Nominal Price) 2.86 5.42 2.77 4.68 5.41 Average realised gas price 1.50 1.73 1.84 2.21 2.62 6 5 Henry Hub 4 $US / Mscf 3 Average Realised Gas Price 2 1 0 2000 2001 2002 2003 2004 21
Slide 22: Costs US$M
FY 2000 – FY 2004 Total Costs (Producing Assets) 1800 Operational Costs 20 DD&A 1600 Secondary Taxes 1400 369 550 408 401 15 1200 385 / b oe Costs US$M US$ US$ / boe 1000 491 580 10 583 800 529 564 600 749 5 400 485 543 554 463 200 0 0 2000 2001 2002 2003 2004 22
Slide 23: FY 2004 EBIT (US$M)
FY 2004 EBIT (US$M) 1,207 14.25 / boe 340 Bass Strait (527) 11.21 / boe 12.64 / boe 145 13.30 / boe Expl / BD -15 NWS (541) UK/ Middle East /Africa 20.97 / boe Expl / BD -146 Americas Expl / BD -42 -18 -58 Aust/Asia Expl / BD Divisional Other Activities TOTAL EBIT: 1,391 M 23
Slide 24: EBIT Sensitivities FY 2005
EBIT Sensitivities FY 2005 • Price $1/bbl (WTI) +/- US$55M • Price US10¢/Mcf (GoM Existing) * +/- US$1.5M • Price 10 pence/Mcf (NORSAT) * +/- US$2.4M • Exchange Rate US¢1/A$ +/- US$6M Net Monetary Liabilities +/- US$1M Operations • No hedging * Variability only occurs for North Sea and GoM. All othe
Slide 25: FY2004 Capex, Exploration & Business Development vs DD&A
FY2004 Capex, Exploration & Business Development vs DD&A (US$M) 266 17 244 451 139 72 UK/ Middle East/ Africa 145 358 Americas 191 Exploration & BD Aust/Asia Capex DD&A 25
Slide 26: Total Capital vs % Returns
FY 2001 – FY 2004 Total Capital vs % Returns 4000 70 EB 60 Average Net Operating Assets US$M IT R OC 1123 % 3000 741 50 E BIT M arg 547 380 in % 40 2000 1151 % 695 1053 804 30 20 1000 1516 1402 1488 1359 10 0 0 2001 2002 2003 2004 Aust / Asia UK / Middle East Americas *EBIT Margin % excludes third p
Slide 27: Petroleum Free Cash Flow
Petroleum FY 2000 – FY 2004 Free Cash Flow 2000 152 206 340 273 243 288 459 1500 711 909 952 US$M 1000 2068 2036 1910 2043 FCF 1,643 1819 FCF 1,371 500 FCF 820 FCF 758 FCF 751 0 2000 2001 2002 2003 2004 Cash Flow before Capex and Exploration Free Cash Flow (Pre-T ax) Capital Expenditure Exploration
Slide 28: PSC – General Principles
PSC – General Principles • Contractor pays for / bears risk of all exploration, development and production • Contractor reimbursed for share of ‘agreed’ costs from production over a fixed term (consisting of capital and operating cost contributions) • Remaining ‘profit oil’ is divided between Contra
Slide 29: Petroleum Relative to the Industry Players
Petroleum Relative to the Industry Players Annual Production Proved Reserves ExxonMobil ExxonMobil Shell BP BP Shell ChevronTexaco ChevronTexaco Total Total ConocoPhillips ConocoPhillips ENI ENI Repsol-Ypf Repsol-Ypf Statoil Statoil EnCana Anadarko Devon Occidental Occidental EnCana Anadarko Norsk H
Slide 30: Peer Group Benchmarking
Peer Group Benchmarking BHP Billiton Petroleum’s Peer Group Ranking Range of 3 year averages from 2000/01 to 2003/04 100% 22% $7.36/boe top quartile performance 75% $2.19/boe Key BHPB Percentile 50% $8.43/boe range of 3yr BHPB 3yr ave’s from ave to 00/01 to 03/04 2003/04 106% 25% -2.3% pa 0% Develop
Slide 31: Exploration
Petroleum Business Briefing Exploration December 2004
Slide 32: Overview
Overview • BHP Billiton Exploration Overview • BHP Billiton Exploration Activity update 32
Slide 33: BHP Billiton Petroleum Exploration Aspirations and Goal
BHP Billiton Petroleum Exploration Aspirations and Goal Creation of Value through the discovery & appraisal of hydrocarbon resources with the aim of establishing reserves to support commercially viable development projects, sustaining existing core areas and building new core businesses 33
Slide 34: On track to meet 5 Year Targets based on discoveries made
On track to meet 5 Year Targets (to FY 06) based on discoveries made at top quartile resource based finding cost Exploration Discoveries FY 02 to Present GoM AUSTRALIA • Cascade • Pyrenees (Ravensworth / Crosby / Stickle) • Boris North • Vincent • Shenzi • Stybarrow • Vortex • Chinook TRINIDAD & TOB
Slide 35: So how does Resource convert to Reserve-based FC?
So how does Resource convert to Reserve-based FC? A useful guide based on our past 3-5 years performance Discovered Appraised Developed / Producing P50 Resource P50 Resource P1 + P2 Reserves @ @ @ <$1.00 - 1.25 / boe $1.60 – 2.00 / boe Assuming 80% resource to reserve conversion across our global po
Slide 36: Exploration screening of many opportunities, funds focused on few areas
Exploration involves screening of many opportunities but 85% to 90% of funds & effort are allocated to a few select areas Core Post -Capture 85% - 90% of funds/activity Exploration Exploration Focus Exploration Test New Ventures Pre -Capture 10% – 15% Opportunity of funds/activity New Ventures Scree
Slide 37: Location of current exploration screening, testing and executing activities
Location of our current exploration screening, testing and executing activities Business Development Sphere Nth Africa, M East / Russia / Maritime Subcontinent Canada Pakistan GoM Algeria Brunei Borneo Trinidad Philippines Offshore Indonesia Columbia/Venezuela NWS Exmouth Brazil South Carnarvon Afri
Slide 38: Exploration and Appraisal Budget Breakdown for FY05
Exploration and Appraisal Budget Breakdown for FY 05 demonstrates focus of expenditure • Total gross exploration budget ~ ALLOCATED - BY GEOGRAPHY US$300 M Glob al Mgmt New Ventures • 85% of spend in existing 3 core 6% exploration areas NORSAT CANADA • 2/3rds within the GoM GOM PHILIPPINES S.AFRICA
Slide 39: GoM: Drilling activity in past 12 months
GoM: Drilling activity in past 12 months included appraisal wells at Neptune & Shenzi + 2 discoveries. 2 expl wells currently drilling JOSEPH STARLIFTER Legend BHPB Exp l. Acreage Drilling Gas BHPB Producing Acreage Discovery Overide Lease Sale 192 High Bid MAKALU Drilling h e lf DEEP G as S SHENZI
Slide 40: GoM: Next 12 months drilling plans
GoM: Over the next 12 months drilling at least 3 exploration wells along with 3 appraisal wells Legend BHPB Exp l. Acreage BHPB Producing Acreage Overide Lease Sale 192 High Bid h e lf DEEP G as Knotty S Head Miocene Northern SHENZI Structural Play Delineation Green Canyon MAD DOG & PUMA SHENZI r e
Slide 41: Trinidad & Tobago: exploration drilling and 3 discoveries
Trinidad & Tobago: exploration drilling was the focus in last 12 months, with 3 discoveries made BHP Billiton blocks Subject to ‘discussions’ Block 23(a) Block 21 Block 22 Blocks Blocksnotnotawarded awarded–– Block 23(b) BHP BHPBilliton Billitonhas has Tobago rights rightsto todiscussions discussion
Slide 42: Trinidad & Tobago: next 12 months targets
Trinidad & Tobago: In the next 12 months a significant number of both nearfield and other targets will be drilled BHP Billiton blocks Subject to ‘discussions’ Block 23(a) Block 21 Block 22 Discussions Discussionswith with Block 23(b) MEEI MEEIto toprogress progress Tobago capture captureof ofacreage
Slide 43: Bass Strait: Northern Margin to be tested
Bass Strait: The Northern Margin of the basin will be tested with the West Moonfish and other wells Bairnsdale Lakes Entrance VICTORIA e e l ni P ip ed po s Pr o West WestMoonfish Moonfish Sweetlips Sunfish Sale Moonfish West Wirrah Tuna Tuna Longford Seahorse N. Turrum Whiting Batfish Kipper Snappe
Slide 44: W. Australia: Scarborough appraisal, Stybarrow & Pyrenees
W. Australia: An appraisal well will be drilled at Scarborough. Stybarrow & Pyrenees will be progressed towards sanction. Scarborough Scarborough Goodwyn North Rankin Jansz_Io 27 LNG PLANT 0k Gorgon m BARROW PORT HEDLAND ISLAND DAMPIER Pyrenees PyreneesComplex Complex KARRATHA &&Stybarrow Stybarrow
Slide 45: New Ventures: Strategic Study, Capture and Execute Areas
New Ventures: Strategic Study, Capture and Execute Areas Maritime MaritimeCanada Canada&&West West Greenland Greenland Algeria Algeria&& Libya Libya Circum CircumBorneo Borneo Northern NorthernSouth South Mexico, Mexico,Deepwater Deepwater America America GoM GoM Southern Southern Africa Africa 45
Slide 46: Summary
Summary • Petroleum Exploration has delivered a consistent stream of sanctioned projects which contribute material cash flow and value and has organically built Petroleum’s 3rd core area in the Gulf of Mexico • Attractive exploration opportunities exist and BHP Billiton has the people, systems, proc
Slide 47: Gas Developments and Opportunities
Petroleum Business Briefing Gas Developments and Opportunities December 2004
Slide 48: Gas Assets and Regional Gas Strategies
Gas Assets and Regional Gas Strategies UK US gas Cabrillo GoM Algeria Atlantic Port Pakistan Basin LNG Pacific Basin LNG Pacific Basin LNG Trinidad NW Shelf / WA Pilbara LNG / Scarborough E Aust gas Bass Strait / Otway / CBM Significant asset position Growth opportunities Regional gas strategy 48
Slide 49: Pacific Basin: North West Shelf LNG
Pacific Basin: Serving markets in Asia and West Coast Americas North Rankin North West Shelf LNG Goodwyn • Train 4 start up Cossack Pioneer • Korea supply tender – NWS short listed • Japanese contracts renegotiations LNG PLANT Port Hedland • Spot cargoes Dampier BARROW Karratha • Train 5 evaluation
Slide 50: Pacific Basin: Pilbara LNG
Pacific Basin: Serving markets in Asia and West Coast Americas North Rankin Pilbara LNG Scarborough Jansz_Io Goodwyn • ‘Pilbara LNG’ site selected • BHP Billiton operator 6 Mtpa 27 plant 0 Gorgon km BARROW ISLAND • Initial supply from Scarborough ―3D Seismic complete Macedon THEVENARD ―Appraisal Wel
Slide 51: Pacific Basin: Cabrillo Port
Pacific Basin: Serving markets in Asia and West Coast Americas Cabrillo Port Wheel er Ridge Kramer Junction Needles • Serves California market Los Angeles Topock Cabrillo Port • LNG Floating Storage and Ehrenberg Regas Facility • Regas capacity - 1.5 Bcf/day • 800 MMcf/d average send out • Connects
Slide 52: Atlantic Basin: Gulf of Mexico Gas
Atlantic Basin: Serving markets in North American East Coast and Europe Gulf of Mexico Gas West Cameron • Gas Production ramping up Starlifter ―West Cameron/other - 52 MMcf/d ―Mad Dog Dec 04 ~ 25 MMcf/d Green Canyon 18/60 ―Atlantis 06 ~ 65 MMcf/d ―Starlifter - potential Atlantis development Typhoon
Slide 53: Atlantic Basin: Trinidad & Tobago
Atlantic Basin: Serving markets in North American East Coast and Europe ATLANTIC OCEAN Trinidad & Tobago • Angostura – gas field with oil rim TOBAGO • Current T&T gas P50 gas -1.5 Tcf Delaware Angostura • Exploration ongoing Port of Spain Howler • Multiple market opportunities TRINIDAD VENEZUELA 0 5
Slide 54: Atlantic Basin: UK and Algeria
Atlantic Basin: Serving markets in North American East Coast and Europe • UK ―Liverpool Bay − BHP Billiton operated − 250 MMcf/d ―North Sea − Bruce & Keith − 30 MMcf/d ―Gas & Power Marketing in the Hague • Algeria ―Ohanet − BHP Billiton - led $1B wet gas development − Sonatrach co-Operator − 700 MMc
Slide 55: Eastern Australia Gas: Discrete domestic markets
Eastern Australia Gas: Discrete domestic markets • Bass Strait gas supplies >90% of Victoria market;100% of Tasmania market; ~20% NSW • TXU and AGL contracts to 2017 • Minerva start-up Dec 2004 Cairns Townsville • Gas from Victoria to supply four Australian Mt Isa states Mackay M oranbah Rockhampton
Slide 56: Pakistan: Discrete domestic markets
Pakistan: Discrete domestic markets Sui Guddu eiln e Zamzama nPi p Jacobabad No rt hr e Sui Kandkot Qadirpur • Zamzama supplies 15% Pakistan gas M ari M ehar Rehmat demand Sukkur Zamzama Gas M iano • Gas production – 2001: 80 MMcf/d Field Kadanwari 2003: 300 MMcf/d Sawan INDIA 2007: 450 MMcf/d Dadu
Slide 57: Gas Developments and Opportunities – Conclusion
Gas Developments and Opportunities – Conclusion • 1997 – 2020 world energy demand 60% expected increase • Gas – one third of that increase in demand • Worldwide LNG market changing ― Greater market acceptance ― Increased flexibility ― Increased liquidity, BUT ― More players • BHP Billiton has experi
Slide 58: Conclusion and Questions
Petroleum Business Briefing Conclusion and Questions December 2004
Slide 59: Summary
Summary Efficiency • Top quartile net income per boe and return on capital • Second quartile finding and finding and development costs Delivery • 5 projects in 2003/2004 to date • 3 projects to start before end CY 2004 Growth • Several opportunities maturing to project status • Strong exploration po
Slide 60: Conclusion
Conclusion • The Petroleum business is a value driver for BHP Billiton • Petroleum is a differentiating factor for BHP Billiton • We are a well established oil and gas business with: – solid performance – strong producing assets – value adding growth opportunities – consistent strategic direction 60
Slide 61: Ohpobilliton
Pf Ohpobilliton