BP plc · LSE:BP.
BP — Sanford Bernstein Strategic Decisions Conference 2008
25 slides from BP's conference presentation, Sep 23, 2008
Slide 1: The changing face of energy and the role of the IOC
“The changing face of energy and the role of the IOC" Iain Conn Chief Executive – BP Refining & Marketing Sanford Bernstein Strategic Decisions Conference 23 September 2008
Slide 2: Cautionary Statement
Cautionary Statement Forward Looking Statements - Cautionary Statement This presentation and the associated slides and discussion contain forward looking statements, particularly those regarding continuing operational momentum; expected growth in resources and production; expected start up and timin
Slide 3: US energy sources 1850-2000
US energy sources 1850-2000 100 90 80 70 60 50 % 40 30 20 10 0 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Wood Coal Hydro Oil Gas Nuclear Renewables Source: IEA
Slide 4: Four key drivers of the energy future
Four key drivers of the energy future • GDP growth • Significant resources Demand Supply • Urbanisation Growth Challenges • Infrastructure • Demand mgmt. • Non-conventionals • Local pollution Environmental Security • Import dependence • Climate change Constraints of Supply • Resource competition
Slide 5: Energy demand growth
Energy demand growth Global energy demand growth by region (1971-2030) 18,000 16,000 14,000 Energy demand (Mtoe) 12,000 10,000 8,000 6,000 4,000 2,000 0 1971 2005 2030 OECD Transition economies Developing countries Source: IEA WEO APS 2008
Slide 6: Spare oil production capacity
Spare oil production capacity 90 Global production 80 capacity 70 Global output Million b/d 60 50 40 30 20 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 Source: International Energy Agency (IEA), DOE and Goldman Sachs Commodities Research
Slide 7: Substantial global fossil resources
Substantial global fossil resources 6,000 Reserves & Resources (bnBoe) 5,000 Yet to Find Unconventional 4,000 Unconventional 3,000 Yet to Find Yet to Find 2,000 Proven 1,000 R/P Proven R/P Ratio R/P Ratio Ratio 42 yrs. Proven 60 yrs. 133 yrs. 0 Oil Gas Coal Source: BP Statistical Review (2008); Surv
Slide 8: Dislocation of supply and demand
Dislocation of supply and demand 14% 22% 32% 41% 84% 90% 86% 78% 68% 59% 10% 16% Consumption Reserves Consumption Reserves Consumption Reserves OIL GAS COAL 3 Largest energy markets (N. America + Europe + Asia Pacific ROW Source: BP Statistical Review 2008
Slide 9: CO2 from fossil fuels is accumulating in the atmosphere
CO2 from fossil fuels is accumulating in the atmosphere… 4 450 Annual CO2 emissions from 3 400 concentration (ppmv) fossil-fuels (GTonC) Atmospheric CO2 2 350 1 300 0 250 1840 1860 1880 1900 1920 1940 1960 1980 2000 2020 OECD NOECD Atmospheric carbon dioxide Source: Keeling and Whorf, 2005; Neftel e
Slide 10: The Solution Set
“The Solution Set” Demand Growth Supply Challenges Energy Resources Efficient Market Technology Energy Policy Environmental Security Constraints of Supply
Slide 11: The role of the IOC
The role of the IOC • Enable markets and policy - global multilateral energy vehicles • Take on and lead frontier resource development • Leverage capabilities - technology, know-how, major projects • Manage efficient hydrocarbon movements and infrastructure • Invest for the future - alternatives, ef
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Slide 13: BP resources and reserves growing
BP resources and reserves growing Non-proved Proved Conventional oil Deepwater oil Water flood viscous 17.8 bn boe and heavy oil* 42.1 bn boe Conventional gas LNG gas* Tight gas* 13 years Coal bed methane* 30 years * Non-conventional Resources at end 2007 on a combined basis of subsidiaries and equi
Slide 14: Upstream production volumes
Upstream production volumes Re-based 125 120 BP guidance 115 at $60/bl 110 BP 105 100 Total Exxon Mobil 95 Chevron 90 85 RDS 80 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Company reports
Slide 15: Upstream growth – production 2007-08
Upstream growth – production 2007-08 Rolling 4qtr production (re-based) 102 Total 101 100 BP ex-TNK-BP 99 BP 98 Chevron 97 RDS 96 Exxon Mobil 2007Q1 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 Source: Company reports
Slide 16: TNK-BP value growth
TNK-BP value growth Revised shareholder agreement sets framework for value growth • MOU signed by BP and AAR on September 4th 2008 • Retains 50/50 JV structure • Revised governance structure − Three new independent directors to TNK-BP Board − New independent CEO − Reduction in size of management com
Slide 17: R&M competitive performance
R&M competitive performance Underlying ROACE(1) (post-tax) % 30 25 20 Competitor average(2) % 15 Competitor range(2) 10 BP R&M 5 0 2003 2004 2005 2006 2007 (1) BP and Competitor data adjusted to comparable basis (2) Competitor set comprises R&M segments ExxonMobil, Royal Dutch Shell, Chevron, Conoco
Slide 18: R&M performance gap at $7.50/bbl refining margin
R&M performance gap at $7.50/bbl refining margin(1) Pre-tax earnings Portfolio / Mix Performance $3.5-4.0 bn RCP pre-tax (1) BP Global Indicator Margin (GIM)
Slide 19: R&M: Closing the performance gap
R&M: Closing the performance gap Sources and phasing Repositioning cost efficiency • Business services and overheads Simplification • Fuels Value Chains, marketing operations • Portfolio – consolidation and focus of footprint Restoring revenues • Refining performance 2008 2009 2010 2011 BP projectio
Slide 20: BP R&M competitive performance
BP R&M competitive performance Underlying ROACE(1) (post-tax) % 30 25 20 Competitor average(2) 15 Competitor range(2) % 10 5 BP R&M 0 (5) 2003 2004 2005 2006 2007 1H08 (1) BP and Competitor data adjusted to comparable basis (2) Competitor set comprises R&M segments ExxonMobil, Royal Dutch Shell, Che
Slide 21: Refinery throughputs
Refinery throughputs Re-based 110 105 100 BP Chevron RDS 95 Exxon Mobil Total 90 85 2007Q1 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 Source: Company reports
Slide 22: Corporate simplification
Corporate simplification Continued focus on costs and efficiency • Reduction in corporate overhead by 15-20% • Headcount reduction on track • 20% of senior positions removed • Stronger linkage between performance and reward
Slide 23: Alternative Energy
Alternative Energy BP Solar Sales BP wind installed capacity (gross) 800 4 r o wth . th G .a ow p.a. Solar Sales (MW) 600 3 BP 0% p gr >6 Installed GW BP 80% > 400 2 200 1 0 0 2006 2008 2010 2006 2008 2010 Sources: BP projections Installed at end 07 Development Pipeline Sources: BP projections • BP
Slide 24: In summary
In summary • IOC’s are equipped for the challenges of a changing world • BP’s capabilities and portfolio are distinctive • Closing the competitive gap – performance delivery and growth − Material prospects for growth in the upstream − Downstream turnaround − Focus on costs and corporate simplificati
Slide 25: Q&A
Q&A
BP — Sanford Bernstein Strategic Decisions Conference 2008 on 6ix