Bhp Group Ltd · ASX:BHP
Bhp — Investor Day (November 2019)
61 slides from Bhp's investor day presentation, Nov 12, 2019
Slide 1: Petroleum briefing: Positioned for long-term value creation
Petroleum briefing Positioned for long-term value creation Geraldine Slattery | President Operations Petroleum 11 November 2019Petroleum briefing Positioned for long-term value creation Geraldine Slattery | President Operations Petroleum 11 November 2019
Slide 2: Disclaimer: Forward-looking statements
Disclaimer Forward-looking statements This presentation contains forward-looking statements, including statements regarding: trends in commodity prices and currency exchange rates; demand for commodities; plans, strategies and objectives of management; closure or divestment of certain operations or
Slide 3: Statement of petroleum resources
Statement of petroleum resources The estimates of Petroleum Reserves and Contingent Resources contained in this presentation are based on, and fairly represent, information and supporting documentation prepared under the supervision of Mr. A. G. Gadgil, who is employed by BHP. Mr. Gadgil is a member
Slide 4: We start with our purpose
We start with our purpose A strong sense of purpose drives better outcomes for all stakeholders Our new purpose To bring people and resources together to build a better world Petroleum briefing 11 November 2019 4We start with our purpose A strong sense of purpose drives better outcomes for all stake
Slide 5: Petroleum is positioned for long-term value creation
Petroleum is positioned for long-term value creation Our strategy identifies how to position the portfolio to maximise long-term value and deliver high returns for shareholders Best commodities Best assets Best capabilities Oil attractive for decades >60% EBITDA margin Safety and sustainability even
Slide 6: Quality assets delivering value and returns
Quality assets delivering value and returns A strong base combined with high-return projects and exploration growth opportunities significantly increases value Strong returns from our high-quality portfolio 1 (ROCE , %) Over the past five years our portfolio has delivered Strong consistent high marg
Slide 7: High-margin barrels drive production growth and returns
High-margin barrels drive production growth and returns Current opportunities deliver significant volumes, and more than offset Bass Strait and North West Shelf field declines Value accretive production potential over the next decade • Strong free cash flow and returns through 2020s (Production, MMb
Slide 8: Petroleum investments compete for capital
Petroleum investments compete for capital Flexibility to manage investments across the Group • We aim to balance investments, shareholder returns and balance Capital Allocation Framework underpins investment decisions sheet strength to maximise value and returns Operating Capital productivity produc
Slide 9: Petroleum creates a stronger and more resilient BHP
Petroleum creates a stronger and more resilient BHP Petroleum provides portfolio benefits, beyond being an attractive commodity 1 Petroleum reduces cash flow volatility Oil is an attractive commodity (Net operating cash flow volatility, %, nominal) Potential supply- ~10% demand reduction in gap vola
Slide 10: Our strategy to maximise value and returns
Our strategy to maximise value and returns Petroleum aligns directly with BHP’s strategy Highly attractive commodities positioned Culture and capabilities that enable the to meet the world’s growing energy needs execution of our business strategy ü Crude oil ü Unwavering focus on safety Best Best ü
Slide 11: Oil and gas market outlook underpins our investments
Oil and gas market outlook underpins our investments Michiel Hovers Group Sales and Marketing Officer AngosturaOil and gas market outlook underpins our investments Michiel Hovers Group Sales and Marketing Officer Angostura
Slide 12: We are deliberate about the commodities we choose
Commodities Assets and opportunities Exploration Capabilities Value and returns We are deliberate about the commodities we choose Focused on holistic long-term value creation potential, informed by supply-demand balance – not just demand outlook Favourable supply and demand gap Large market sizes Fa
Slide 13: Supportive fundamentals for oil and advantaged gas
Commodities Assets and opportunities Exploration Capabilities Value and returns Supportive fundamentals for oil and advantaged gas New supply needs to be continuously induced to balance markets Why we like oil When we like gas • Conventional oil assets to remain attractive • Gas assets are attractiv
Slide 14: Oil demand to peak and then decline modestly
Commodities Assets and opportunities Exploration Capabilities Value and returns Oil demand to peak and then decline modestly Demand tempered by the electrification of transport and fuel efficiency improvements, offset by rising living standards 1 Liquids demand by region Liquids demand by sector (MM
Slide 15: Electrification of transport: a strategic theme
Commodities Assets and opportunities Exploration Capabilities Value and returns Electrification of transport: a strategic theme Light duty vehicle and bus fleet electrification is inevitable, however the medium and heavy truck fleet remain resilient Light duty vehicles fleet by segment Bus fleet by
Slide 16: Compelling long run supply-demand fundamentals
Commodities Assets and opportunities Exploration Capabilities Value and returns Compelling long run supply-demand fundamentals A supply gap of more than 50 MMbbl/d could emerge by 2035; “yet-to-find” barrels will be an increasingly important contributor Oil demand and onstream supply • Compelling fu
Slide 17: Gas demand diversified and resilient; LNG gaining share
Commodities Assets and opportunities Exploration Capabilities Value and returns Gas demand diversified and resilient; LNG gaining share LNG demand could double by 2035, outpacing global gas demand growth Global gas demand by sector • Global gas demand to rise (Bcf/d) – share of total primary energy
Slide 18: Price harmonisation increases importance of asset choice
Commodities Assets and opportunities Exploration Capabilities Value and returns Price harmonisation increases importance of asset choice Natural gas assets with access to infrastructure will be advantaged as the global LNG market matures • LNG market moving towards a global benchmark – US export cap
Slide 19: Supportive fundamentals for oil and advantaged gas
Commodities Assets and opportunities Exploration Capabilities Value and returns Supportive fundamentals for oil and advantaged gas New supply needs to be continuously induced to balance markets Why we like oil When we like gas • Conventional oil assets to remain attractive • Gas assets are attractiv
Slide 20: High-return assets and opportunities
High-return assets and opportunities Geraldine Slattery President Operations Petroleum ShenziHigh-return assets and opportunities Geraldine Slattery President Operations Petroleum Shenzi
Slide 21: Quality assets concentrated in key heartlands
Commodities Assets and opportunities Exploration Capabilities Value and returns Quality assets concentrated in key heartlands Over 3 Bboe in resources provide potential to expand our presence in the Gulf of Mexico, Trinidad & Tobago and Western Australia Western Australia Eastern Canada Western Aust
Slide 22: Replenishing the portfolio with high-value resources
Commodities Assets and opportunities Exploration Capabilities Value and returns Replenishing the portfolio with high-value resources Balanced portfolio provides strong foundation for growth through the next decade 1,2 Heartlands Value accretive production potential over the next decade (Production,
Slide 23: Australia: strong free cash flow generation
Commodities Assets and opportunities Exploration Capabilities Value and returns Australia: strong free cash flow generation Bass Strait and North West Shelf demonstrate the strength of our base assets 1,2 Australian assets: production by lifecycle • Bass Strait: high returns with upside through the
Slide 24: Scarborough: working to advance development
Commodities Assets and opportunities Exploration Capabilities Value and returns Scarborough: working to advance development Material growth potential through development of Scarborough and unlocking additional contingent resources BHP’s Western Australia heartland • Large, long-life resource 1 – 2C
Slide 25: US Gulf of Mexico: big fields get bigger
Commodities Assets and opportunities Exploration Capabilities Value and returns US Gulf of Mexico: big fields get bigger Growing pipeline of high-return projects across all three assets 1 US Gulf of Mexico delivers value-accretive production • Atlantis: additional targets unlocked with advanced seis
Slide 26: Trion: Mexico's first deepwater development
Commodities Assets and opportunities Exploration Capabilities Value and returns Trion: Mexico’s first deepwater development Material oil resource advancing towards an early 2020s final investment decision BHP’s Trion position in relation to US Gulf of Mexico blocks • Large oil resource: 222 MMboe ne
Slide 27: Trinidad & Tobago: a material, deepwater gas discovery
Commodities Assets and opportunities Exploration Capabilities Value and returns Trinidad & Tobago: a material, deepwater gas discovery Building on our existing position in the region and successfully unlocking a frontier basin Trinidad & Tobago North licenses and discoveries • T&T North deepwater ga
Slide 28: A healthy pipeline of options supports our future
Commodities Assets and opportunities Exploration Capabilities Value and returns A healthy pipeline of options supports our future Constantly identifying and derisking new opportunities while progressing only the best options 2 Significant growth potential over the next decade Value accretive product
Slide 29: Delivering the future through exploration
Delivering the future through exploration Sonia Scarselli VP Exploration and Appraisal Deepwater InvictusDelivering the future through exploration Sonia Scarselli VP Exploration and Appraisal Deepwater Invictus
Slide 30: Our exploration strategy is delivering
Commodities Assets and opportunities Exploration Capabilities Value and returns Our exploration strategy is delivering Exploration has added ~800 MMboe of 2C resources since FY17 1,2 Substantial increase in 2C resources, back to FY12 levels Access Explore Appraise (Net 2C resources, MMboe) 2,200 • T
Slide 31: Investing in the BHP way underpins our success
Commodities Assets and opportunities Exploration Capabilities Value and returns Investing in the BHP way underpins our success Getting the right data, at the right time, and capturing the play is crucial to creating value in exploration Technical success translating to likely commercial success • In
Slide 32: Early access to capture value and enable optionality
Commodities Assets and opportunities Exploration Capabilities Value and returns Early access to capture value and enable optionality We have added tier one potential opportunities to the portfolio at high equity • Early access with high equity to manage risk through lifecycle • Large material positi
Slide 33: Eastern Canada: major potential tier one oil opportunity
Commodities Assets and opportunities Exploration Capabilities Value and returns Eastern Canada: major potential tier one oil opportunity Orphan Basin bringing options for the 2030s • Opportunity details Orphan Basin – BHP (100% WI, operator) 1 – Orphan Basin contains significant prospective potentia
Slide 34: Western GoM: extending prolific Perdido play sub-salt
Commodities Assets and opportunities Exploration Capabilities Value and returns Western GoM: extending prolific Perdido play sub-salt Using innovative technology to image the play • Opportunity details – BHP (100% WI, operator); secured key position as early mover GB Hub – historically underexplored
Slide 35: Finding new hydrocarbons – executing our program
Commodities Assets and opportunities Exploration Capabilities Value and returns Finding new hydrocarbons – executing our program Testing five petroleum systems over the next three years Stage FY20 FY21 FY22 Moving to appraisal T&T North Appraisal T&T South Exploration Testing deeper potential Tiebac
Slide 36: Capabilities to deliver on our strategy
Capabilities to deliver on our strategy Geraldine Slattery President Operations Petroleum HoustonCapabilities to deliver on our strategy Geraldine Slattery President Operations Petroleum Houston
Slide 37: Social value is an integral part of our business
Commodities Assets and opportunities Exploration Capabilities Value and returns Social value is an integral part of our business The health and safety of our people, environment and wellbeing of our communities are essential preconditions to shareholder value Our people Environment Communities Safet
Slide 38: Exploration strategy reset is delivering success
Commodities Assets and opportunities Exploration Capabilities Value and returns Exploration strategy reset is delivering success Larger discoveries and higher success rate drives improvement in finding cost 1 2015-2019 average discovery size • Building on recent exploration success (MMboe per well)
Slide 39: High performance culture delivering results
Commodities Assets and opportunities Exploration Capabilities Value and returns High performance culture delivering results Relentless focus on costs and continuous improvement demonstrated in our operational and drilling performance Unit costs actively managed • Continuous focus on productivity and
Slide 40: Transformation unlocking new opportunities
Commodities Assets and opportunities Exploration Capabilities Value and returns Transformation unlocking new opportunities Focused on key value drivers for BHP Transparent Earth • OBN acquisition for deepwater exploration Explore • Low frequency seismic sources for breakthrough image accuracy • Mach
Slide 41: Petroleum delivers value and strong returns
Petroleum delivers value and strong returns Geraldine Slattery President Operations Petroleum ShenziPetroleum delivers value and strong returns Geraldine Slattery President Operations Petroleum Shenzi
Slide 42: High-margin barrels drive production growth and returns
Commodities Assets and opportunities Exploration Capabilities Value and returns High-margin barrels drive production growth and returns Current opportunities deliver significant volumes, and more than offset Bass Strait and North West Shelf field declines Value accretive production potential over th
Slide 43: Petroleum investments compete for capital
Commodities Assets and opportunities Exploration Capabilities Value and returns Petroleum investments compete for capital Flexibility to manage investments across the Group 1 Petroleum unconstrained investments to fund all existing options • We aim to balance investments, shareholder returns and (US
Slide 44: Delivering strong margins, high returns and value
Commodities Assets and opportunities Exploration Capabilities Value and returns Delivering strong margins, high returns and value A strong base combined with high-return major projects and exploration growth opportunities significantly increases value 2 EBITDA EBITDA margin Growth options have the p
Slide 45: Petroleum is positioned for long-term value creation
Commodities Assets and opportunities Exploration Capabilities Value and returns Petroleum is positioned for long-term value creation Our strategy identifies how to position the portfolio to maximise long-term value and deliver high returns for shareholders Best commodities Best assets Best capabilit
Slide 46: BHP
BHP
Slide 47: Appendix
AppendixAppendix
Slide 48: Petroleum guidance
Petroleum guidance Conventional Petroleum FY20e Medium term Petroleum production (MMboe) 110 -116 ~110 FY20 volumes expected to decrease due to planned maintenance at Atlantis and natural field decline across the portfolio. Decline of ~1.5% p.a. over medium term includes projects yet to be sanctione
Slide 49: World class portfolio of producing assets
World class portfolio of producing assets Country Asset Operator BHP ownership First production FY19 production Future Development Options Australia Bass Strait Esso Gippsland Basin Joint Venture (GBJV): 50.0% 1969 Liquids: 10.6 MMboe West Barracouta (sanctioned) Kipper Unit Joint Venture (KUJV): 32
Slide 50: Bass Strait: high returns with upside through the 2020s
Bass Strait: high returns with upside through the 2020s Strong market demand supports continued investments Net production Bass Strait detail Investment opportunities Sanctioned projects (MMboe) 40 • West Barracouta sanctioned in FY19, ~20% IRR, with first production expected in CY21 Unsanctioned pr
Slide 51: Western Australia: strong base with optionality
Western Australia: strong base with optionality Material growth potential through development of Scarborough and unlocking additional contingent resources Net production West Australia assets Investment opportunities Unsanctioned projects (MMboe) Thebe North West Shelf 50 • Scarborough offers materi
Slide 52: US Gulf of Mexico: large, long-life and expandable
US Gulf of Mexico: large, long-life and expandable Near-term projects deliver attractive returns, while major growth options increase production volumes Net production Building on a solid foundation Investment opportunities Sanctioned projects (MMboe) 40 • Atlantis Phase 3 (19% complete) first oil C
Slide 53: Future options: worked for value, timed for returns
Future options: worked for value, timed for returns Investment decisions made in accordance with our Capital Allocation Framework and fully consider the broader market impact Option Description Operator BHP Potential Capex Tollgate Potential first 1 Ownership execution BHP share production timing (U
Slide 54: Atlantis & Mad Dog: 10+ years of future delivery
Atlantis & Mad Dog: 10+ years of future delivery Long history of consistent growth and delivery through the next decade Mad Dog and Atlantis production Atlantis Phase 3: BHP (44% WI); BP (operator) - sanctioned (BHP production, MMboe) 8 well subsea tieback; first production FY21 30 Project IRR: >40%
Slide 55: Greater Shenzi and Wildling: continuing to deliver value
Greater Shenzi and Wildling: continuing to deliver value Applying technology to unlock more resource and value Shenzi and Wildling production Shenzi growth projects: BHP (44% WI, operator) - unsanctioned (BHP production, MMboe) Subsea pumping opportunities to increase production rates from existing
Slide 56: Mexico: Trion project advancing
Mexico: Trion project advancing Building on our early-mover, high-equity positions in key areas to grow our portfolio Net production Drilling our future Investment opportunities Unsanctioned projects (MMboe) 40 • Gross 2C resource of 436 MMboe (net 222 MMboe) • Unlocking opportunities by being first
Slide 57: Trinidad & Tobago: deepwater development potential
Trinidad & Tobago: deepwater development potential Building on our existing position in the region Net production Drilling our future Investment opportunities Exploration discovery International Offshore Boundaries (MMboe) Barbados BHP Current Leasehold • Trinidad & Tobago North: Gross 2C Resources
Slide 58: Exploration: extending our conventional reserve life
Exploration: extending our conventional reserve life Investment decisions made in accordance with our Capital Allocation Framework and fully consider the broader market impact Option Location Ownership Maturity Earliest first Description Planned future activity production Finalising processing of Oc
Slide 59: Mexico: Evaluating opportunities in offshore Mexico
Mexico Evaluating opportunities in offshore Mexico • Opportunity details – targeting first exploration well in FY21 – included in Trion Minimum Work Program – established strong relationship with PEMEX • Next steps BHP Chevron – maturing drill ready prospects near Trion CNOOC – evaluating multiple p
Slide 60: Trinidad & Tobago deep potential
Trinidad & Tobago deep potential Testing multiple play types International offshore boundaries Barbados 29 BHP current leasehold • Opportunity details 23(a) 14 – BHP (65% WI, operator) – Le Clerc opened the Magellan Gas Play and saw deep Trinidad oil shows & Tobago – evaluating multiple play types t
Slide 61: Signatures
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BHP Group Limited and BHP Group Plc Date: November 11, 2019 By: /s/ Rachel Agnew Name: Rachel Agnew Tit