Vedanta Resources plc

Vedanta Resources — Investor Day (July 2017)

65 slides from Vedanta Resources's investor day presentation, Jul 11, 2017

  1. Slide 1: Oil & Gas Day

    © 2017 Vedanta Limited Oil & Gas Day 11 July, 2017

  2. Slide 2: Cautionary Statement & Disclaimer

    © 2017 Vedanta Limited 2 Cautionary Statement & Disclaimer The views expressed here may contain information derived from publicly available believe that the assumption on which our forward-looking statements are based are sources that have not been independently verified. reasonable, any of those as

  3. Slide 3: Agenda

    © 2017 Vedanta Limited 3 Agenda Sudhir Mathur Cairn : Sand to Oil Journey Acting CEO Suniti Bhat Resource to Reserve Conversion Director - Oil & Gas Matthew Stanley Enhanced Recoveries & Tight Oil Senior Technical Fellow Sivakumar Pothepalli Tight Gas Director - Rajasthan Pankaj Kalra Reserves to Ca

  4. Slide 4: Cairn: Sand to Oil Journey

    © 2017 Vedanta Limited 4 Sudhir Mathur Cairn : Sand to Oil Journey Acting CEO

  5. Slide 5: Our Vision

    © 2017 Vedanta Limited 5 Our Vision  A global, world class E&P player o To enhance production levels to 500 kboepd thereby contributing to 50% of India’s domestic production & Reserves of > 3 billion barrels of oil equivalent o To establish a diversified and sustainable portfolio o To deliver long-

  6. Slide 6: HSE & Sustainability – An Integral Part of Business

    © 2017 Vedanta Limited 6 HSE & Sustainability – An Integral Part of Business Building a zero harm culture System & Processes Driving top quartile performance (OGP Indicators)  Integrated best-in-class practices for HSE management , risk reduction and sound HSE assurance throughout the field life cy

  7. Slide 7: HSE & Sustainability – An Integral Part of Business

    © 2017 Vedanta Limited 7 HSE & Sustainability – An Integral Part of Business Building a zero harm culture Business Impact Enables business delivery in safe environment  Value drivers for profitability: High safety, reliability & uptime at workplace  Reducing operating risks and prudent risk manage

  8. Slide 8: Cairn Footprint

    © 2017 Vedanta Limited 8 Cairn Footprint ~7.5 Billion boe of Hydrocarbons Initially In Place 51 discoveries till date

  9. Slide 9: E & P Lifecycle

    © 2017 Vedanta Limited 9 E & P Lifecycle Exploration Discovery Appraisal & Development Field Optimization Enhanced Recovery Decline and Abandonment

  10. Slide 10: RJ-ON-90/1 Block: Sand To Oil Journey

    © 2017 Vedanta Limited 10 RJ-ON-90/1 Block: Sand To Oil Journey “ Oil is found in the minds of men ” – Wallace Pratt Shell acquires the block Acquires 2D and 3D seismic Executed Minimum Work Program as per PSC May 1995 Pre 1995 2002 Frontier block with meagre 2D Seismic and two dry wells by ONGC 7 Y

  11. Slide 11: RJ-ON-90/1 Block: Sand To Oil Journey

    © 2017 Vedanta Limited 11 RJ-ON-90/1 Block: Sand To Oil Journey Only ~7% of the Total HIIP (6.2 Bnboe) have been recovered till date; Target Potential Recovery of 50% through Enhanced Oil Recovery Techniques Shell exits and Cairn assumed 100% PI Accelerated exploration spread over entire block Focus

  12. Slide 12: RJ-ON-90/1 Block: Multiple Play types in the Basin

    © 2017 Vedanta Limited 12 RJ-ON-90/1 Block: Multiple Play types in the Basin Unique proposition of single player in the Basin which has 7 Hydrocarbon bearing Reservoir Systems Already Established Discoveries at Multiple Levels of the Reservoir System Akli Thumbli Thumbli : Tukaram, Raageshwari Oil,

  13. Slide 13: Discovery to Commercial Development

    © 2017 Vedanta Limited 13 Discovery to Commercial Development Our Journey HIIP – ~7.5 bn boe Production till date > 800 mmboe across RJ, Ravva and Cambay Capex Investment > $ 8 bn Contribution to Exchequer ~ USD 24 Bn

  14. Slide 14: Technology & Innovation

    © 2017 Vedanta Limited 14 Technology & Innovation Key to generate higher value on a sustainable basis World’s longest continuously heated pipeline Implemented the world’s largest Enhanced Oil Recovery from Barmer to Bhogat in Gujarat (~700 kms) (EOR) project in less than 12 months Pipeline EOR Intro

  15. Slide 15: Gross Contribution to Exchequer

    © 2017 Vedanta Limited 15 Gross Contribution to Exchequer Contributing to Nation Building Particulars Amount ($ bn) Royalty 5.0 Cess & NCCD 4.5 Profit Petroleum 12.0 Sales Tax / VAT 1.5 Corporate & Dividend Distribution Tax 1.3 Total 24.3 Contribution to Exchequer • Cumulative Contribution till date

  16. Slide 16: Growth Plan

    © 2017 Vedanta Limited 16 Growth Plan RDG Gas project (Implemented in Phases) EUR Capex Key Oil Projects Status o Phase 1: Ramp up production to 40 – 45 mmcfd (mmboe) (US$m) o Phase 2: Gas production to 100mmcfd & Condensate to 5kboped Commencement of Phase-1 in progress Mangala Infill: RDG 86 440 P

  17. Slide 17: Cairn Oil & Gas Business EXCO

    © 2017 Vedanta Limited 17 Cairn Oil & Gas Business EXCO Sudhir Mathur (CFO & Acting CEO) Advisory Board Melody Meyer (Ex - President, Asia-Pacific, Sunil Bohra Madhu Srivastava Srikrishna S Chevron) Suniti Bhat Pankaj Kalra Vidyut Gulati (CCO – Marketing & (Dy. Head HR & (Head - HSSEQ & (Director Oi

  18. Slide 18: Cairn Oil & Gas, SBU Structure

    © 2017 Vedanta Limited 18 Cairn Oil & Gas, SBU Structure Organization structure geared to deliver vision Suniti Bhat (Director Oil & Gas) Sivakumar Pothepalli (Director – Rajasthan) SBU 2 SBU 1 SBU 3 SBU 4 Technical (Tight Oil & Satellite (MBA) (Gas Development) (Offshore Assets) Functions Fields) E

  19. Slide 19: Human Resources

    © 2017 Vedanta Limited 19 Human Resources Focus on nurturing talent to foster growth Attract & Retain Quality Talent Campus Hiring, Hiring for Key Skill-Sets  Global talent from premier Engineering & MBA colleges with Global/ MNC background Performance and Rewards Meritocracy, Transparency & Differ

  20. Slide 20: Human Resources

    © 2017 Vedanta Limited 20 Human Resources Focus on nurturing talent to foster growth Capability Building On-the-job, Mentoring, Formal Training  Professional Career Ladders Employee Connect  On-the-Job Learning through special projects & Periodic connect with Sr. Leadership rotation, e-Learning En

  21. Slide 21: Corporate Social Responsibility

    © 2017 Vedanta Limited 21 Corporate Social Responsibility Commitment to empower local communities and bring sustainable & inclusive growth Health and Sanitation Economic Development ▪ Water Project (INR ~ 100Cr.):  >12k students trained from CEC; Invested ~INR 60 Cr towards setting up o 100+ Jeevan

  22. Slide 22: Resource to Reserve Conversion

    © 2017 Vedanta Limited 22 Suniti Bhat Resource to Reserve Conversion Director - Oil & Gas

  23. Slide 23: Reserves and Resources: An Overview

    © 2017 Vedanta Limited 23 Reserves and Resources: An Overview As per PRMS Guidelines Total Petroleum Initially In Place (PIIP)  Resources are all quantities of petroleum naturally occurring on or within the Earth’s crust  Resources further classified Discovered PIIP Undiscovered PIIP  Reserves (1

  24. Slide 24: RJ-ON-90/1 Block: Rich Portfolio

    © 2017 Vedanta Limited 24 RJ-ON-90/1 Block: Rich Portfolio Total HIIP of ~6.2 Bnboe with a mix of conventional Oil, Tight Oil & Tight Gas Mangala, • Total HIIP of 2.2 Billion Barrels of Oil Equivalent; ~ 18% recovered so far, plans to take recovery rates to 50% Bhagyam & • Proven track record of rec

  25. Slide 25: RJ-ON-90/1 Block: Rich Portfolio

    © 2017 Vedanta Limited 25 RJ-ON-90/1 Block: Rich Portfolio Proven Exploration Track Record with 3 Largest Onshore Discoveries Current Exploration • New Plays being identified for drilling Status • Prospects will add to the existing in-place Volumes

  26. Slide 26: Ravva and CB / OS-2: Remarkable turnaround

    © 2017 Vedanta Limited 26 Ravva and CB / OS-2: Remarkable turnaround Recovery Rates > 45% of total Hydrocarbons In place • Ravva oil & gas field in the KG Basin was developed in partnership with Cairn, ONGC, Videocon & ROS CB RAVVA • 22.5% Participating Interest with Operatorship • As a first in Ind

  27. Slide 27: Ravva and CB / OS 2: Remarkable turnaround

    © 2017 Vedanta Limited 27 Ravva and CB / OS 2: Remarkable turnaround Multifold increase in Ravva Production, Cambay Gas field converted Oil Field Production Journey: Ravva Production Journey: Cambay (kboepd) (kboepd) Gas Oil 69 66 64 60 61 19 19 20 54 52 56 62 51 39 34 41 37 36 14 12 12 14 14 12 10

  28. Slide 28: Rich Exploration Portfolio

    © 2017 Vedanta Limited 28 Rich Exploration Portfolio KG – ONN (Nagayalanka) • Exploration resulted in a light oil discovery and is the largest oil discovery in the onshore part of the KG basin • The Gross Hydrocarbons Initially in Place is approximately 480 mmboe KG Block KG – OSN – (KG Offshore) •

  29. Slide 29: E & P Lifecycle

    © 2017 Vedanta Limited 29 E & P Lifecycle If Exploration leads to Discovery… Exploration Discovery, Appraisal and Development Field Optimization Enhanced Recovery Decline and Abandonment

  30. Slide 30: RJ-ON-90/1 Block: Multiple Play types in the Basin

    © 2017 Vedanta Limited 30 RJ-ON-90/1 Block: Multiple Play types in the Basin Unique proposition of single player in the Basin Akli Pioneering efforts in Technology & Innovation Thumbli driving monetization of multiple plays Tight Oil Tight Gas Dharvi Dungar Enhanced Recovery Barmer Hill Multistage F

  31. Slide 31: RJ-ON-90/1 Block: Discoveries

    © 2017 Vedanta Limited 31 RJ-ON-90/1 Block: Discoveries RJ Block - 3111 Sq Km with rich set of Options 1999 - Guda  Feb 2013: Government approval for 2001 - Sarawati exploration in development areas  Aggressive drilling and seismic campaign 2002 – Raageshwari Oil, Raag Deep Gas to test new plays 2

  32. Slide 32: RJ-ON-90/1 Block: Discoveries

    © 2017 Vedanta Limited 32 RJ-ON-90/1 Block: Discoveries RJ Block - 3111 Sq Km with rich set of Options 1999 - Guda ~40 km 2001 - Sarawati Bhagyam (B) Core Mangala (M) fields 2002 – Raageshwari Oil, Raag Deep Gas Aishwariya (A) DA-2 2003 – Kaameshwari Prospective BH fields 2004 – Mangala, Aishwariya,

  33. Slide 33: Discoveries and Future Potential

    © 2017 Vedanta Limited 33 Discoveries and Future Potential Discoveries Formation Number in each of stratigraphic Prospects interval in Portfolio Akli 4 Thumbli 6 6 Dharvi Dungar 4 13 Barmer Hill 14 10 Fatehgarh 12 3 Deccan Volcanics 3 1 Ghagar-Hakra 4 Karentia Volcanics Lathi 3 1 Malani Volcanics 1

  34. Slide 34: Discovery to Reserves

    © 2017 Vedanta Limited 34 Discovery to Reserves When Discovery leads to Commercial Development • Resources Comprise of Contingent and Prospective Resources Economically Profitable Reserves Technically Exploitable • The estimates of oil and gas reserves have an intrinsic uncertainty. Accessible to Ex

  35. Slide 35: E & P Lifecycle

    © 2017 Vedanta Limited 35 E & P Lifecycle Discovery and successful appraisal leads to commercial development.. Exploration Discovery, Appraisal and Development Field Optimization Enhanced Recovery Decline and Abandonment

  36. Slide 36: Discovery to Commercial Development

    © 2017 Vedanta Limited 36 Discovery to Commercial Development Rajasthan Development ~ USD 6.5 Bn spent so far in Rajasthan Barmer Basin 600+ Wells drilled so far..

  37. Slide 37: Discovery to Commercial Development

    © 2017 Vedanta Limited 37 Discovery to Commercial Development World’s longest heated Pipeline of ~ 700 Kms Radhanpur 10” API -5L- Terminal X56 Heated SANCHOR crude oil 24” Heated pipeline crude oil pipeline Skin effect heating system MANGALA 8” gas 36 SEHMS power pipeline feeding stations BHOGAT RAA

  38. Slide 38: Export Pipeline System – Brief description

    © 2017 Vedanta Limited 38 Export Pipeline System – Brief description  38 Above Ground Installation (AGI) for heating of Pipeline to maintain crude temperature above 65 Deg C  Intermediate pumping station at Viramgam  Terminal/Offtakes- Radhanpur, Viramgam (IOCL), Reliance, ESSAR, Bhogat (MRPL)

  39. Slide 39: Enhanced Recoveries & Tight Oil

    © 2017 Vedanta Limited 39 Matthew Stanley Enhanced Recoveries & Tight Oil Senior Technical Fellow

  40. Slide 40: Hydrocarbon Recovery Mechanisms

    © 2017 Vedanta Limited 40 Hydrocarbon Recovery Mechanisms Mechanisms to target Recovery Rates of 50% RF of 10% of the HIIP Primary recovery • Core Fields have been on production through Water Flood Naturel flow Artificial lift Aquifer drive Pump gas lift etc. • RF upto 20 - 40% of the HIIP Secondary

  41. Slide 41: Polymer Enhanced Oil Recovery

    © 2017 Vedanta Limited 41 Polymer Enhanced Oil Recovery - An exemplar of our commitment towards cutting edge technology and innovation • Polymer flood improves the displacement of oil. The addition of small amounts of polymer to injection water increases the viscosity of the water significantly and

  42. Slide 42: Polymer Enhanced Oil Recovery

    © 2017 Vedanta Limited 42 Polymer Enhanced Oil Recovery - An exemplar of our commitment towards cutting edge technology and innovation Mangala EOR - One of the world’s largest polymer flood projects Mangala EOR - Highlights Mangala EOR performance reaffirms potential of the Rajasthan block. World’s

  43. Slide 43: Central Polymer Facility

    © 2017 Vedanta Limited 43 Central Polymer Facility Process Flow of Polymer to Well Pads Central Polymer Facility (CPF) Well Pad MPT Silos Polymer Polymer Well Storage Storage Yard Treated Water Supply System Polymer Dilution/ Maturation Solution Polymer Polymer Solution Injection Mixing tank Vessel

  44. Slide 44: Mangala’s Fast-track ASP EOR Program

    © 2017 Vedanta Limited 44 Mangala’s Fast-track ASP EOR Program Pilot ASP Flood Performance Eight Folds increase in Oil Rate in ASP Pilot; Incremental recovery>20%; One of the best published ASP Pilot performance results in the world

  45. Slide 45: Mangala’s Fast-track EOR Program

    © 2017 Vedanta Limited 45 Mangala’s Fast-track EOR Program ASP Flood Performance • Rare Large Scale ASP Flood Projects across globe • High End Pioneering project, Full Field Expansion Planned for Mangala. To be followed in Bhagyam and Aishwariya • High Capex; Opex, lower oil price challenge; Innovat

  46. Slide 46: Tight Oil: Fueling the Growth Engine

    © 2017 Vedanta Limited 46 Tight Oil Fueling the Growth Engine Barmer Hill vs. US Shale Technology Implementation: Setting new industry Parameter Unit US Shale Barmer Hill benchmarks Porosity % 4-16 15-30 Permeability md 0.001-0.3 0.1-5 o Adoption of cutting edge technologies helping maximize recover

  47. Slide 47: Tight Gas

    © 2017 Vedanta Limited 47 Sivakumar Pothepalli Tight Gas Director - Rajasthan

  48. Slide 48: RDG Gas

    © 2017 Vedanta Limited 48 RDG Gas Enhanced Recovery through Cutting Edge Technology Limited Entry Frac - multiple perforation in single stage Improvement in Frac Design  ~26% increase in gas EUR till 2030 as compared to FDP estimate  Gross recovery (gas plus condensate) up from 74 to 86 mmboe  ~3

  49. Slide 49: RDG Gas

    © 2017 Vedanta Limited 49 RDG Gas Realizing Capex Efficiency for Phased Development Addressable Switch Firing System resulted in RDG development in phases  ~50% reduction in per frac cost to US$ 230,000 Phase 1  Over 70% of cost saving is structural from operating  Gas production at 40-45 mmscfd,

  50. Slide 50: Reserves to Cash Flow

    © 2017 Vedanta Limited 50 Pankaj Kalra Reserves to Cash Flow Deputy CFO

  51. Slide 51: Introduction to Fiscal Systems

    © 2017 Vedanta Limited 51 Introduction to Fiscal Systems Royalty/Tax Contractual Based systems systems Title to hydrocarbons resides with the contractor who compensates the host government in royalties (% of revenues) and taxes (% of profits) Eg. USA, Canada, Norway. India through OALP is moving to

  52. Slide 52: Production Sharing Contract

    © 2017 Vedanta Limited 52 Production Sharing Contract Production Sharing Contract Contract between Contractors and Government for the grant of Licenses and Leases for Exploration and Development and Production Sharing Contract (PSC) provides the license to operate execution of Petroleum Operations K

  53. Slide 53: PSC Cash Flow

    © 2017 Vedanta Limited 53 PSC Cash Flow Cost Petroleum* E & D costs Royalty / Investment Multiple = Cumulative Net Cess Cash Income / Cumulative Investment Opex Cumulative Cumulative Net Cash Investment Project Income Revenue How is Profit Share Arrived at? Profit Petroleum * Cost Petroleum definiti

  54. Slide 54: Sample Financials Working

    © 2017 Vedanta Limited 54 Sample Financials Working

  55. Slide 55: Sample Financials Working - Sensitivity

    © 2017 Vedanta Limited 55 Sample Financials Working - Sensitivity Net Revenues EBITDA Every additional 1 mmbbls of production at Oil price of 50$/bbl 21.9 MM 11.8 MM Additional 10$ higher price realization for every 1 mmbbls produced 4.0 MM 2.9 MM 28.0 MM 28.0 MM Every USD 100 MM of Capex increase A

  56. Slide 56: Continuous Optimization of Operating Costs

    © 2017 Vedanta Limited 56 Continuous Optimization of Operating Costs RJ Waterflood Operating Costs (US $/bbl) World Cost Operating Cost (US$/bbl) Brazil 32 -11% -17% United Kingdom 31 5.8 Canada 22 5.2 Colombia 20 4.3 Angola 17 Nigeria 15 United States 15 China 14 Venezuela 14 Norway 12 Kazakhstan 1

  57. Slide 57: Way Forward

    © 2017 Vedanta Limited 57 Sudhir Mathur Way Forward Acting CEO

  58. Slide 58: Estimated Ultimate Recovery Potential

    © 2017 Vedanta Limited 58 Estimated Ultimate Recovery Potential Realizing the true potential of our blocks and contributing 50% of India’s domestic production In bnboe 3.0 • MBA fields with Enhanced Oil Recovery techniques has potential to achieve Recovery Rates of 50% of HIIP 1.2 • Application of c

  59. Slide 59: Open Acreage Licensing Program (OALP)

    © 2017 Vedanta Limited 59 Open Acreage Licensing Program (OALP) • 65% of the Indian sedimentary area on offer for exploration to Production • Indian sedimentary basins are gridded into sectors (10’ x 10’ equals to 331 sq. km): Flexibility to carve out blocks • Investors to bid without waiting for th

  60. Slide 60: Valuation Comparison

    © 2017 Vedanta Limited 60 Valuation Comparison EV EV / 1P EV / EBIITDA (USD Billions) ($/bbl) Peer 1 56 26 22 Peer 2 39 6 6 Peer 3 37 21 11 Peer 4 28 14 11 Peer 5 27 37 17 Peer 6 26 19 9 Peer 7 25 23 9 Peer 8 20 28 13 Peer 9 20 14 9 Peer 10 19 17 19 Peer 11 18 14 12 Peer 12 15 7 10 Peer 13 14 12 10

  61. Slide 61: Appendix

    © 2017 Vedanta Limited 61 Appendix

  62. Slide 62: Speaker Profiles

    © 2017 Vedanta Limited 62 Speaker Profiles Sudhir Mathur, Acting CEO, Cairn Oil & Gas Mr. Mathur has been the Chief Financial Officer at Cairn Oil & Gas since September 2012 & currently is the Acting Chief Executive Officer He has over 31 years experience working in various industries such as teleco

  63. Slide 63: Speaker Profiles

    © 2017 Vedanta Limited 63 Speaker Profiles Pankaj Kalra, Deputy CFO, Cairn Oil & Gas Mr. Kalra currently serves as Deputy CFO of Cairn Oil and Gas and has been associated with Cairn since 2014 He leads all areas of Finance & Accounts including Corporate and Management Reporting, Joint Venture Financ

  64. Slide 64: Speaker Profiles

    © 2017 Vedanta Limited 64 Speaker Profiles Sivakumar Pothepalli, Director Rajasthan, Cairn Oil & Gas Mr. Sivakumar Pothepalli currently serves as Director – Rajasthan Asset & ExCo Member, He leads Operations & Development of all Onshore Oil fields in Rajasthan. He has been working with Cairn since t

  65. Slide 65: Q&A

    17 Vedanta Limit vedanta Q&A transforming elements ‘OUR OIL AND-GAS POWERS:THE GROWTH ‘OF SMART CITI

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