Bhp Group Ltd · ASX:BHP
Bhp — Investor Day (November 2019)
65 slides from Bhp's investor day presentation, Nov 11, 2019
Slide 1: News Release: Petroleum briefing
NEWS RELEASE Release Time IMMEDIATE Date 11 November 2019 Release Number 21/19 Petroleum briefing BHP President Operations Petroleum, Geraldine Slattery, today said Petroleum is set to deliver strong returns and contribute significant value for BHP through the 2020s and beyond, built on a foundation
Slide 2: Guidance and future options summary
Presentations will be webcast live at https://edge.media-server.com/mmc/p/362g83wf and all materials be available on our website at bhp.com. A summary of guidance and project details contained in the presentation is included below. Guidance Asset FY20e Medium term 1 Production Unit costs Production
Slide 3: Future options and exploration options
Options Operator BHP Potential Capex Tollgate Potential Description Ownership execution BHP first timing share production2 (US$m) Two Shenzi North wells tied-back to the Shenzi platform, provides the opportunity to accelerate production Wildling Pre- BHP 44%-72% 1-2 years ~500 FY23 and unlock additi
Slide 4: Further information on BHP
Further information on BHP can be found at: bhp.com Media Relations Investor Relations Email: media.relations@bhp.com Email: investor.relations@bhp.com Australia and Asia Australia and Asia Gabrielle Notley Tara Dines Tel: +61 3 9609 3830 Mobile: +61 411 071 715 Tel: +61 3 9609 2222 Mobile: + 61 499
Slide 5: Petroleum briefing
Petroleum briefing Positioned for long-term value creation Geraldine Slattery | President Operations Petroleum 11 November 2019
Slide 6: Disclaimer
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 7: 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 8: 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 4
Slide 9: 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 10: 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 Over the past five years our portfolio has delivered (ROCE1, %) Strong consistent high margin
Slide 11: 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 • Strong free cash flow and returns through 2020s Value accretive production potential over the next decade (Production, MMb
Slide 12: 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 13: 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 Petroleum reduces cash flow volatility1 Oil is an attractive commodity (Net operating cash flow volatility, %, nominal) Potential supply- ~10% demand reduction in gap volat
Slide 14: 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 Crude oil Unwavering focus on safety Best Best
Slide 15: Oil and gas market outlook underpins our investments
Oil and gas market outlook underpins our investments Michiel Hovers Group Sales and Marketing Officer Angostura
Slide 16: 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 17: 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 18: 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 Liquids demand by region Liquids demand by sector1 (MMb
Slide 19: 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 20: 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 • Compelling fundamentals Oil demand and onstr
Slide 21: 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 to rise Global gas demand by sector (Bcf/d) – share of total primary energy
Slide 22: 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 23: 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 24: High-return assets and opportunities
High-return assets and opportunities Geraldine Slattery President Operations Petroleum Shenzi
Slide 25: 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 Western Australia Australia Rest of E
Slide 26: 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 Heartlands Value accretive production potential over the next decade1,2 (Production, M
Slide 27: 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 • Bass Strait: high returns with upside through the 2020s Australian assets: production by lifecycl
Slide 28: 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 • Large, long-life resource BHP’s Western Australia heartland – 2C re
Slide 29: 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 • Atlantis: additional targets unlocked with advanced seismic US Gulf of Mexico delivers value-accretive productio
Slide 30: 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 • Large oil resource: 222 MMboe net 2C resources BHP’s Trion position in relation to US Gulf of
Slide 31: 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 • T&T North deepwater gas exploration program successful Trinidad & Tobag
Slide 32: 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 Significant growth potential over the next decade Value accretive productio
Slide 33: Delivering the future through exploration
Delivering the future through exploration Sonia Scarselli VP Exploration and Appraisal Deepwater Invictus
Slide 34: 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 Substantial increase in 2C1,2 resources, back to FY12 levels Access Explore Appraise (Net 2C resources, MMboe) 2,200 • Ti
Slide 35: 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 • Invest in the right data to describe the volume, risk and val
Slide 36: 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 37: 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) – Orphan Basin contains significant prospective potential1
Slide 38: 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 39: 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 T&T North Appraisal Moving to appraisal T&T South Exploration Testing deeper potential Tiebac
Slide 40: Capabilities to deliver on our strategy
Capabilities to deliver on our strategy Geraldine Slattery President Operations Petroleum Houston
Slide 41: 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 42: 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 • Building on recent exploration success 2015-2019 average discovery size1 (MMboe per well) –
Slide 43: 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 • Continuous focus on productivity and high-margin investments Uni
Slide 44: 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 45: Petroleum delivers value and strong returns
Petroleum delivers value and strong returns Geraldine Slattery President Operations Petroleum Shenzi
Slide 46: 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 • Strong free cash flow and returns through
Slide 47: 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 • We aim to balance investments, shareholder returns and Petroleum unconstrained investments to fund all existing options1 bala
Slide 48: 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 EBITDA EBITDA margin Growth options have the pot
Slide 49: 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
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Slide 51: Appendix
BHP Appendix
Slide 52: 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 53: 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 54: 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 (MMboe) Sanctioned projects 40 • West Barracouta sanctioned in FY19, ~20% IRR, with first production expected in CY21 Unsanctioned pr
Slide 55: 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 (MMboe) Unsanctioned projects Thebe North West Shelf 50 Jupiter • Scarborough offer
Slide 56: 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 (MMboe) Sanctioned projects 40 • Atlantis Phase 3 (19% complete) first oil C
Slide 57: 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 Ownership execution BHP share production1 timing (US
Slide 58: 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 Atlantis Phase 3: BHP (44% WI); BP (operator) - sanctioned Mad Dog and Atlantis production (BHP production, MMboe) 8 well subsea tieback; first production FY21 Project IRR: >40% 30
Slide 59: 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 growth projects: BHP (44% WI, operator) - unsanctioned Shenzi and Wildling production (BHP production, MMboe) Subsea pumping opportunities to increase production rates from existing
Slide 60: 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 (MMboe) Unsanctioned projects 40 • Gross 2C resource of 436 MMboe (net 222 MMboe) • Unlocking opportunities by being first
Slide 61: 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 (MMboe) International Offshore Boundaries Barbados Exploration discovery BHP Current Leasehold • Trinidad & Tobago North: Gross 2C Resources
Slide 62: 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 63: 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 – maturing drill ready prospects near Trion Chevron CNOOC – evaluating multiple p
Slide 64: Trinidad & Tobago deep potential
Trinidad & Tobago deep potential Testing multiple play types International offshore boundaries 29 Barbados • Opportunity details BHP current leasehold 23(a) 14 – BHP (65% WI, operator) – Le Clerc opened the Magellan Gas Play and saw deep oil shows Trinidad & Tobago – evaluating multiple play types t
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