Equinor ASA · OSL:EQNR
Equinor ASA — Statoil — Q2 2017 Earnings Presentation
30 slides from Equinor ASA's earnings presentation, Sep 26, 2017
Slide 1: Business Update incl. 2nd Quarter 2017
Business Update incl. 2nd Quarter 2017 Photo: Gina Krog
Slide 2: Developing a distinct and competitive portfolio
Developing a distinct and competitive portfolio Norwegian International continental shelf oil & gas Build on unique position Deepen core areas • Highly cost competitive • Enhance Brazil portfolio • Attractive project pipeline • Flexible US position • Exploration potential • New growth options Johan
Slide 3: Strong cash generation – high value reinvestment
Strong cash generation – high value reinvestment Growing cash flow with flexibility1 Managing the balance sheet2 Free cash flow positive @ USD 50/bbl in 2017 Reducing net debt at > USD 50/bbl 25 Non sanct > USD 50 BE 40% Non sanct USD 40-50 BE 20 Non sanct < USD 40 BE USD 50/bbl USD 50/bbl 30% USD b
Slide 4: 1H17: Continued operating and financial progress
1H17: Continued operating and financial progress 1H17 Guidance FCF positive at $50/bbl Brent in 2017 Cash flow $4bn positive FCF @ $52/bbl Brent (includes scrip to Q3 2017) Reduced by 8 percentage points from Comfortable in 30s; Gearing 35.6% to 27.5% YTD 15-30% long-term target range 2017: USD ~11
Slide 5: OPEX / SG&A trends
OPEX / SG&A trends DPN: OPEX / SG&A INT: OPEX / SG&A 2Q17 8 1 600 1 400 • DPN: 11% underlying1 6 1 200 reduction y/y in OPEX / USD million NOK billion 1 000 SG&A per boe in NOK 4 800 600 2 400 • INT: Underlying2 OPEX / 200 SG&A per boe in USD 0 0 largely flat y/y (-4% y/y 1Q14 2Q14 3Q14 4Q14 1Q15 2Q
Slide 6: Delivering high value production growth
Delivering high value production growth Equity production Major start-ups planned for 2017-2022 mboe/d ~3% CAGR1 2017 2018 2019 2020 2021 2022 2 500 Aasta Johan Peregrino Troll Future Johan Sverdrup ~5% Gina Krog Hansteen Sverdrup Phase 2 future 2 000 Snøhvit Hebron Mariner Trestakk Utgard Johan Cas
Slide 7: Investing in next generation portfolio
Investing in next generation portfolio World class projects 2015-221 Development break-even major project decisions 2015-174 Average break-even USD 27 /bbl 80 Oil share 65% Trestakk 60 2023 2017 USD/bbl Payback2 @ USD 50/bbl 40 Average IRR3 30% Johan Castberg USD 90/bbl USD 70/bbl 20 20% USD 50/bbl
Slide 8: Johan Sverdrup – culture for value creation
Johan Sverdrup – culture for value creation Capex improvements1 >~25% 50% 250 200 Phase 2 85 Full field resources 150 2-3 bn boe NOK billion Phase 2 40-55 100 Phase 1 123 Improvements Phase 2 Current break-even prices Phase 1 92 50 Phase 1 Phase 2 Full field below below below 0 At PDO Phase 1 execut
Slide 9: Johan Castberg – continuously optimising concept
Johan Castberg – continuously optimising concept Capex improvements1 > 50% 120 100 100 Field resources 80 450-650 mn boe NOK billion 60 Phase 2 45 Improvements break-even price 40 45-50 Improvements 2016 2013 above CMU 2016 below Current below 20 0 2013 Pre 2016 Drilling Subsea Floater Market Curren
Slide 10: Building a profitable new energy business
Building a profitable new energy business Capex potential per year USD million 1500 750 - ~ - 750 500 500 Dudgeon 2016 2017-20 2020-25 ¹ Industrial approach Value driven Growth opportunities • Leverage core competence • From subsidies to markets • 15-20% of capex in 20302 • Scale & technology reduce
Slide 11: Sustainable value creation from financial discipline
Sustainable value creation from financial discipline Investing in world class portfolio Growing cash flow • Break-even @ USD 27/bbl • Visible production growth • Material capex flexibility • Improving cash margin • RoACE1 above 10% @ USD 70/bbl 2020 • FCF positive @ USD 50/bbl in 2017 Dividend polic
Slide 12: Supplementary slides
Supplementary slides “Pp * Statoil
Slide 13: Net debt ratio reduced by 8 percentage points
Net debt ratio reduced by 8 percentage points • Strong cash flow from 2017 YTD; USD mill operations Cash flow from operating activities Taxes paid 10,808 2 (1,727) • Net debt ratio reduced Dividends paid Proceeds from Cash flows to sale of assets investments from 35.6% to 27.5% (728) 377 (4,704) YTD
Slide 14: DPN: Continued strong operational performance and cash flow
DPN: Continued strong operational performance and cash flow 2017 and 2018 Focus Progress 2017 Major NCS Projects Continued sustainable improvements: Safety improvements World class projects • Continued safety improvements • SIF 0.7 YTD Q2 2017 • Improving production efficiency • Adding new capacity
Slide 15: DPI: A competitive international portfolio
DPI: A competitive international portfolio 2017 and 2018 Focus Major International Projects Mature and high-grade portfolio and further improve profitability: • Cost improvements on producing assets Significant improvements • License extensions in project design, • Enhance Brazil portfolio costs and
Slide 16: DPI: Brazil – competitive portfolio
DPI: Brazil – competitive portfolio Peregrino Main Carcará EXP portfolio • Statoil operatorship • 9 blocks, multiple wells program • 76% stake – world class • 10 commitment wells 2016-18 • Pre-salt, light oil 32 ºAPI • Espírito Santo basin, one of the 3 • Open acreage bid round Northern most prolifi
Slide 17: DPUSA: On track to achieve “90 to 50”
DPUSA: On track to achieve “90 to 50” Growing CFFO while capex is flexible1 Cash margin2 Production potential @ USD 50 WTI mboe/d Sanctioned US onshore 90/bbl ~360 Non-sanctioned New target: USD 12.50/boe Old target: USD 10/boe USD billion 70/bbl 240 70/bbl 50/bbl ~USD 5/boe 50/bbl 3 CFFO Capex CFFO
Slide 18: MMP: Delivering resilience
MMP: Delivering resilience MMP adjusted earnings1 1 200 1 000 800 USD million 600 400 MMP guidance 200 0 -200 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Natural gas Europe Natural gas US Liquids Other 1 Before tax 18
Slide 19: Planned exploration drilling programme 2017
Planned exploration drilling programme 2017 Norway United Russia Kingdom Canada Turkey US GoM Suriname Angola Brazil Prolific Basins High Impact Well Onshore 19
Slide 20: Wisting, Johan Castberg, Goliat, Snøhvit
Wisting Johan Castberg Goliat Snøhvit
Slide 21: Statoil’s digital roadmap
Statoil’s digital roadmap 1. Digital safety, 6. Process digitalisation security & sustainability & insight 2. Subsurface 5. Data driven analytics Statoil data operations platform 3. Next generation 4. Field of the well delivery future 21 Classification: Internal 5 juli 2017 © Statoil ASA
Slide 22: The ambition is to become a digital leader within our core areas
The ambition is to become a digital leader within our core areas Safety, security and sustainability Productivity Always safe | High value | Low carbon Cost Efficiency Capabilities and culture 22 26/09/2017
Slide 23: Key #1: Energy efficiency improvement
Key #1: Energy efficiency improvement Global GDP 2-2.6 times higher in 2050, Energy demand -5% – + 30% Energy intensity World GDP and energy demand World energy demand per fuel Index, 1990=100 Index, 1990=100 Billion toe 600 New Renewables Biomass Reform Reform Renewal Rivalry Hydro Nuclear Renewal
Slide 24: Huge investments needed in oil in all scenarios
Huge investments needed in oil in all scenarios …to replace production and satisfy demand Oil demand and supply from existing fields Cumulative oil demand gap 2015-50, compared Million barrels per day Billion barrels 140 1 000 Potential legacy production Renewal add-on 120 800 Reform add-on Rivalry
Slide 25: …and the same is the case for gas
…and the same is the case for gas …to replace production and satisfy demand Gas demand and supply from existing fields Cumulative gas demand gap 2015-50, compared Billion cubic meters Trillion cubic meters 5000 100 Rivalry add-on Reform add-on Demand 80 Norway 4000 range ME 60 3000 40 2000 20 Declin
Slide 26: Globalizing gas – flows according to price signals
Globalizing gas – flows according to price signals …to US LNG currently in the money; prices driven by other factors as well Short-run marginal cost ranges for US 2018 LNG supply to Asia and Europe, and prices Asia North America Europe USD/MMBtu USD/MMBtu USD/MMBtu 6.43) 5.82) 1.5 – 2.2 0.8 - 1.2 5.
Slide 27: Gas Prices 1st Half 2017
Gas Prices 1st Half 2017 NBP disconnects from continental hubs 8 European Spot Gas Prices and FW to Q1-2018 7 USD/MMBtu 6 5 4 3 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 NBP Day Ahead TTF Day Ahead NCG Day Ahead NBP FW TTF FW NCG FW • Strong deliveries have led to record export levels
Slide 28: Outlook 2017
Outlook 2017 Period Outlook Organic capex 2017 USD ~11 billion1 2016-2017 ~5% organic production growth Production 2016-2020 ~3% organic CAGR 2017 30 mboe per day Maintenance 3Q 2017 50 mboe per day Exploration 2017 USD ~1.3 billion Efficiency 2017 USD 1 billion improvements 1) Based on USD/NOK exch
Slide 29: Forward-looking statements
Forward-looking statements This report contains certain forward-looking statements that involve risks and uncertainties. In some cases, adverse changes in tax regimes; the development and use of new technology; geological or technical we use words such as "ambition", "continue", "could", "estimate",
Slide 30: Investor Relations in Statoil
Investor Relations in Statoil E-mail: irpost@statoil.com Investor Relations Europe Peter Hutton Senior Vice President phutt@statoil.com +44 7881 918792 Lars Valdresbråten IR Officer lava@statoil.com +47 40 28 17 89 Erik Gonder IR Officer ergon@statoil.com +47 99 56 26 11 Anca Jalba IR Officer ancj@s