Aker Bp Asa · OSL:AKRBP
Aker Bp Asa — Investor Day (January 2019)
104 slides from Aker Bp Asa's investor day presentation, Jan 17, 2019
Slide 1: Capital Markets Day 2019
Capital Markets Day 2019 Aker BP ASA 17 January 2019
Slide 2: Disclaimer
Disclaimer This Document includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this Document are based on current expectations, estimates and projections about globa
Slide 3: Today's agenda
AKER BP’S CAPITAL MARKETS DAY 2019 Today’s agenda Time Speaker 09:00 Welcome High growth, low cost and improved efficiency Karl Johnny Hersvik, CEO Maximizing value of our producing assets Svein J. Liknes, SVP Operations & Asset Development Our main growth projects Karl Johnny Hersvik, CEO Break 11:
Slide 4: High growth, low cost and improved efficiency
High growth, low cost and improved efficiency Capital Markets Day 2019 Karl Johnny Hersvik Chief Executive Officer
Slide 5: High growth – low cost – improved efficiency
AKER BP CAPITAL MARKETS DAY 2019 High growth – low cost – improved efficiency ACHIEVEMENTS RECONSTRUCTING HIGH AMBITIONS in 2018 support our the way we operate for value creation strategic development our business 5
Slide 6: Key focus areas in 2018
2018 ACHIEVEMENTS Key focus areas in 2018 1 Strong operational performance 2 Increased reserves and resources 3 Capital discipline 4 Strengthen position in core areas 5 Deliver on the dividend ambition 6
Slide 7: Production volume and cost as guided
2018 ACHIEVEMENTS Production volume and cost as guided 1 Strong operational performance Increased reserves and resources 155 700 boed produced Capital discipline >80% oil and liquids Strengthen position in core areas USD 12 per boe production cost Deliver on the dividend ambition 7
Slide 8: Organic and acquired growth in profitable volumes
2018 ACHIEVEMENTS Organic and acquired growth in profitable volumes Strong operational performance 2 Increased reserves and resources >100% organic Reserve Replacement Ratio Capital discipline +18% in contingent resources Strengthen position in core areas ~55 mmboe net volumes in Frosk and Gekko Del
Slide 9: Strong capital discipline
2018 ACHIEVEMENTS Strong capital discipline Strong operational performance Increased reserves and resources USD 1.20 bn 2018 capital spending below plan 3 Capital discipline -30% lower abandonment expenditures than planned Strengthen position in core areas On track current field developments Deliver
Slide 10: Added important assets to lift future production
2018 ACHIEVEMENTS Added important assets to lift future production Strong operational performance Increased reserves and resources 11 licences acquisition of portfolio from Total Capital discipline King Lear acquisition of gas/cond. discovery from Equinor 4 Strengthen position in core areas ~170 mmb
Slide 11: Returning the value creation to shareholders
2018 ACHIEVEMENTS Returning the value creation to shareholders Strong operational performance USD 450 million dividend payment in 2018 Increased reserves and resources Increased ambitions 1150 Capital discipline 1050 950 850 750 750 450 650 Strengthen position in core areas 550 250 5 Deliver on the
Slide 12: High growth – low cost – improved efficiency
AKER BP CAPITAL MARKETS DAY 2019 High growth – low cost – improved efficiency ACHIEVEMENTS RECONSTRUCTING HIGH AMBITIONS in 2018 support our strategic the way we operate for value creation development our business 12
Slide 13: Targeting significant efficiency improvements
RECONSTRUCTING THE WAY WE OPERATE OUR BUSINESS Targeting significant efficiency improvements Production cost per barrel Full cycle project break-even below $7 $35 13
Slide 14: Our improvement journey
RECONSTRUCTING THE WAY WE OPERATE OUR BUSINESS Our improvement journey From low hanging fruits to ambition of changing the industry “Cost “Process “Improvement “Reorganizing reductions” improvement ” culture” the value chain” 2015 2016 2017 2018 Cost project with USD 100m Dedicated Improvement &
Slide 15: Aker BP's four main improvement pillars
RECONSTRUCTING THE WAY WE OPERATE OUR BUSINESS Aker BP’s four main improvement pillars Partnerships and alliances Digitalization Maximize flow efficiency & minimize waste = Improved margins & reduced execution time LEAN operations Flexible business model 15
Slide 16: Reorganizing the value chain with partnerships and alliances
Reorganizing the value chain with partnerships and alliances 16
Slide 17: Aker BP in the forefront for digitalization of E&P
Aker BP in the forefront for digitalization of E&P 17
Slide 18: Securing effective processes
Securing effective processes 18
Slide 19: Establish flexible business models
Establish flexible business models 19
Slide 20: High growth – low cost – improved efficiency
AKER BP CAPITAL MARKETS DAY 2019 High growth – low cost – improved efficiency ACHIEVEMENTS RECONSTRUCTING HIGH AMBITIONS in 2018 support our strategic the way we operate for value creation development our business 20
Slide 21: Profitable growth from existing portfolio
HIGH AMBITIONS FOR VALUE CREATION Profitable growth from existing portfolio Production ambition (mboepd) 500 CAGR ‘18-25: +16% 400 CAGR NOAKA ‘18-25: 300 +11% Non-sanctioned 200 CAGR ‘18-25: +1% 100 Sanctioned - 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 21
Slide 22: Driving down cost – targeting USD 7 per barrel
HIGH AMBITIONS FOR VALUE CREATION Driving down cost – targeting USD 7 per barrel Production cost (USD/boe) 15 ~12.5 ~12 2019 impacted by high 12 maintenance activity to reduce backlog at Valhall and Ula 9 ~$10 Sanctioned only Johan Sverdrup will contribute to lower unit cost from 2020 ~$7 6 Fu
Slide 23: Low carbon operator with continued focus on safety
HIGH AMBITIONS FOR VALUE CREATION Low carbon operator with continued focus on safety CO2 emissions intensity1) Serious Incident Frequency (SIF) kg CO2 per boe (2017) Per million exposure hours 27.2 24.6 24.4 17.8 1.1 14.8 13.6 11.1 9.2 8.8 0.6 0.6 HSSE ambition: 7.2 No serious personal or process sa
Slide 24: Exploring for valuable growth opportunities
HIGH AMBITIONS FOR VALUE CREATION Exploring for valuable growth opportunities 2019 – a very exciting exploration year Excellent acreage position for future success Number of licences on the NCS per company APA2018 awards Licences Drilling 15 wells 156 Targeting net prospective resources 500 mmboe Ak
Slide 25: Counter-cyclical and value-driven approach to M&A
HIGH AMBITIONS FOR VALUE CREATION Counter-cyclical and value-driven approach to M&A A cornerstone of Aker BP’s growth agenda Total reserves and resources (mmboe) at year-end 2 000 1 500 1 000 500 - 2013 2014 2015 2016 2017 2018 2P reserves 2C contingent resources Logos represents acquisitions, merge
Slide 26: Increased ambition for dividend payout
HIGH AMBITIONS FOR VALUE CREATION Increased ambition for dividend payout Returning the value creation to shareholders (USD million) 1 150 1 050 950 1 Strong cash flow from 850 existing portfolio 750 Sanctioned only 750 650 2 Profitable growth from 450 550 excellent project pipeline 250 Sanctioned an
Slide 27: High growth – low cost – improved efficiency
AKER BP CAPITAL MARKETS DAY 2019 High growth – low cost – improved efficiency ACHIEVEMENTS RECONSTRUCTING HIGH AMBITIONS in 2018 support our strategic the way we operate for value creation development our business 27
Slide 28: Maximizing value of our producing assets
Maximizing value of our producing assets Capital Markets Day 2019 Svein J. Liknes SVP Operations & Asset Development
Slide 29: Aker BP portfolio overview
Aker BP portfolio overview Alvheim area (operator) High production efficiency and continued resource growth Valhall/Hod (operator) Operated Net Billion barrels produced, ambition to produce another billion production production 320 000 155 700 Ivar Aasen (operator) boepd boepd Pioneering digital ope
Slide 30: Maturing a large resource base
MAXIMIZING VALUE OF OUR PRODUCING ASSETS Maturing a large resource base Development in 2P reserves (mmboe) Development in 2C contingent resources (mmboe) 914 917 946 56 59 Alvheim area 48 11% Skarv area 769 173 NOAKA 12% 33% 44 Valhall area 31% Valhall Area 32% Johan Sverdrup 34% Ula Area 17% Alvhei
Slide 31: Key levers to drive value creation
MAXIMIZING VALUE OF OUR PRODUCING ASSETS Key levers to drive value creation EXECUTE IMPROVE GROW Safe and reliable operations Reconstructing the way Adding profitable barrels we operate 31
Slide 32: Alvheim area
Alvheim area 32
Slide 33: Alvheim area overview
ALVHEIM AREA Alvheim area overview Production history (mboepd gross) 160 Alvheim Vilje 140 Volund 120 Bøyla 100 80 60 40 20 - 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Ownership and reserves Aker BP 2P reserves Field Licence Partners interest mmboe net Alvheim 203 65% ConocoPhillips, Lu
Slide 34: Outstanding production efficiency
EXECUTE Outstanding production efficiency Alvheim area production (mboepd net) Alvheim area production efficiency 80 100% Alvheim Bøyla Vilje Volund 70 80% 60 50 60% 40 40% 30 20 20% 10 - 0% Q1-15 Q3-15 Q1-16 Q3-16 Q1-17 Q3-17 Q1-18 Q3-18 Q1-15 Q3-15 Q1-16 Q3-16 Q1-17 Q3-17 Q1-18 Q3-18 34
Slide 35: Building alliances to drive efficiency improvements
IMPROVE Building alliances to drive efficiency improvements Subsea Alliance – the first of its kind Delivering significant cost improvements1) Plan Actual -36% -13% -23% Organization Alliance $ Scope Incentives Collaboration Volund infill Boa infill Kameleon infill South 1) Cost improvements related
Slide 36: Alvheim's resource base keeps growing
GROW Alvheim’s resource base keeps growing Alvheim area total 2P reserves1) (2P mmboe) 2018 resource additions 700 Frosk discovery • ~50 mmboe gross • Test production from 2019 600 Gekko appraisal 500 • ~40 mmboe gross Trine & Trell acquisition 400 • ~40 mmboe gross • Tieback distance to Alvhe
Slide 37: Alvheim preparing for the next growth cycle
GROW Alvheim preparing for the next growth cycle Alvheim area production outlook (net mboepd) 70 60 50 Frosk 40 Trine Trell Non-sanctioned Gekko 30 Infill wells 20 Skogul 10 Sanctioned Frosk test producer Infill wells - 2018 2019 2020 2021 2022 2023 37
Slide 38: Valhall area
Valhall area = AkerBP
Slide 39: Valhall area overview
VALHALL AREA Valhall area overview Production history (mboepd gross) 140 Hod 120 Valhall 100 80 60 40 20 - 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Ownership and reserves Aker BP 2P reserves Field Licence Partners interest mmboe net Valhall Valha
Slide 40: Valhall – improving regularity and continued drilling
EXECUTE Valhall – improving regularity and continued drilling Production volume (mboepd net) Production efficiency gradually improving 45 100% Valhall Hod 40 35 80% 30 60% 25 20 40% 15 10 20% 5 - 0% Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 2015
Slide 41: Valhall Flank West – on track
EXECUTE Valhall Flank West – on track Project description Reserves 60 mmboe (gross) Unmanned wellhead platform tied back to Valhall Six wells – option for six more Capex NOK 5.5 billion Break-even oil price USD 28.5 per barrel Progressing as planned ~55% complete (Jan 2019) PDO approval De
Slide 42: Continuous improvement in plugging performance
EXECUTE Continuous improvement in plugging performance Faster, cheaper and with minimal CO2 and NOx emissions 120 100 Low complexity 80 High complexity Trend Days 60 40 20 - A-2 A-1 A-25 A-29 A-04 A-14 A-10 A-22 A-05 A-09 A-17 A-20 A-06 A-15 A-23 A-19 A-18 A-30 A-12 A-28 A-21 A-16 A-27 A-13 A-24 A-3
Slide 43: Targeting cheaper, better and smarter wells
IMPROVE Targeting cheaper, better and smarter wells Fishbones – a promising stimulation technology currently being tested at Valhall “Oil and gas in tight reservoirs represent huge opportunities for value creation on the NCS. However, profitable recovery requires willingness from operators and licen
Slide 44: Towards a doubling of production
GROW Towards a doubling of production Valhall area production outlook (net mboepd) 90 80 70 Hod field development 60 Non-sanctioned Infill wells Diatomites 50 40 30 Sanctioned Valhall Flank West 20 Infill wells 10 - 2018 2019 2020 2021 2022 2023 44
Slide 45: Huge resource potential to be unlocked at Valhall
GROW Huge resource potential to be unlocked at Valhall Ambition to produce another billion barrels from the Valhall area1) Strategy Develop infrastructure • Production wells • Water injection • Wellhead platforms Apply LEAN mindset • Huge opportunity set allows for continuous improvement • Execu
Slide 46: Ivar Aasen
Ivar Aasen 46
Slide 47: Field of the Future
IMPROVE First manned platform in Norway to be controlled from shore Onshoring the Ivar Aasen control room Implemented 16 January 2019 An important step towards the Developing industry-leading digital solutions to gain experience and prepare Aker BP’s Field of the Future Field of the Future Imp
Slide 48: Ivar Aasen overview
IVAR AASEN Ivar Aasen overview Production history (mboepd gross) 80 70 60 50 40 30 20 10 - Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Ownership and reserves Aker BP 2P reserves Field Licence Partners interest mmboe net Equinor, Spirit, Ivar Aasen Ivar Aasen 34.8% Wintershall, Neptune, 49
Slide 49: Smart service contract with Framo and Cognite
IMPROVE Smart service contract with Framo and Cognite New approach to operations and maintenance Providing live data to the pump producer from three Aker BP fields Has already contributed to design improvements Enabling “pumping as a service” and new business models for Aker BP 49
Slide 50: Targeting stable production
GROW Targeting stable production Ivar Aasen production outlook (mboepd net) 25 20 Non-sanctioned IOR drilling 15 10 Maintain stable Sanctioned operations Continued IOR drilling 5 Develop Hanz1) - 2018 2019 2020 2021 2022 2023 1) Pending final investment decision 50
Slide 51: Skarv
AkerBP. 51
Slide 52: Skarv area overview
SKARV Skarv area overview Production history (mboepd gross) 160 140 120 100 80 60 40 20 - 2013 2014 2015 2016 2017 2018 Ownership and reserves Aker BP 2P reserves Field Licence Partners interest mmboe net Skarv & Ærfugl Skarv Unit 23.835% Equinor, DEA, PGNiG 90 Snadd Outer 212 E 30% Equinor, DEA, PG
Slide 53: Driving productivity improvements at Skarv
EXECUTE Driving productivity improvements at Skarv Production per quarter (mboepd net) Production efficiency 35 100% 30 80% 25 60% 20 15 40% 10 20% 5 - 0% Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 2015 2016 Production efficiency data from 2015-20
Slide 54: Ærfugl development on track
EXECUTE Ærfugl development on track Tie-back to Skarv Gross reserves 275 mmboe Capex NOK 4.5 billion (PDO estimate, phase 1) Production start late 2020 Break-even oil price USD 18.5 per barrel Phase 2 concept selection planned in 2019 Progressing as planned ~30% complete (Jan 2019) PDO app
Slide 55: Skarv production to be boosted by Ærfugl
GROW Skarv production to be boosted by Ærfugl Skarv area production outlook (mboepd net) 45 40 Non- sanctioned 35 Gråsel 30 25 20 Sanctioned 15 Ærfugl 10 5 - 2018 2019 2020 2021 2022 2023 55
Slide 56: Ula
AkerBP
Slide 57: Ula area overview
ULA AREA Ula area overview Ula area production history (mboepd gross) 200 Tambar Ula 150 100 50 - 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Ownership and reserves Aker BP 2P reserves Field Licence Partners interest mmboe net Ula 019 80% Faroe 39 Tambar 065
Slide 58: Establishing stable and robust operations at Ula
IMPROVE Establishing stable and robust operations at Ula Current priorities for the Ula area Upgrading the facilities • Improve HSE standards • Enable efficient drilling • Strengthen integrity • Improve production regularity Build a better subsurface understanding • Improve reservoir model • Res
Slide 59: Gradually maturing new growth initiatives
GROW Gradually maturing new growth initiatives Ula area production outlook (mboepd net) 14 12 Non-sanctioned 10 8 6 Oda on stream Sanctioned New Ula wells 4 2 - 2018 2019 2020 2021 2022 2023 59
Slide 60: Ambition to rejuvenate Ula as area hub
GROW Ambition to rejuvenate Ula as area hub Significant growth opportunities Ula Area - illustrative production potential Increased oil recovery mboepd gross • The Ula reservoir has responded extremely well to WAG and 100 has further potential to be exploited • Further potential in Ula Triassic •
Slide 61: Key levers to drive value creation
MAXIMIZING VALUE OF OUR PRODUCING ASSETS Key levers to drive value creation EXECUTE IMPROVE GROW Safe and reliable operations Reconstructing the way Adding profitable barrels we operate 61
Slide 62: Our main growth projects
Our main growth projects Capital Markets Day 2019 Karl Johnny Hersvik Chief Executive Officer
Slide 63: Johan Sverdrup
Johan Sverdrup Illustration: TRY/Equinor, Johan Sverdrup Field Centre incl. Phase 2 63
Slide 64: Johan Sverdrup – a world class oil field
Johan Sverdrup – a world class oil field KEY FACTS A Norwegian giant • Gross resources: 2.2-3.2 bn boe • Current reserves: 2.7 bn boe Aker BP interest 11.57% • Operated by Equinor Phase 1 • First oil plan November 2019 • Processing capacity 440 mboepd Phase 2 • Production from Q4 2022 • Proc
Slide 65: Important contributor to production growth and cash flow
JOHAN SVERDRUP Important contributor to production growth and cash flow Production and capex outlook 600 80 Low production cost • Expecting 2-3 USD/boe at 500 plateau production 60 Net production (mboepd) Phase 1 with net production Net capex (USD million) 400 above 50 mboepd Phase 2 developme
Slide 66: NOAKA
NOAKA NOAKA: North Of Alvheim Krafla Askja 66
Slide 67: NOAKA area overview
NOAKA NOAKA area overview Resources mmboe Aker BP mmboe Discovery Licence Operator gross1) share net1) Askja/Krafla 035/072 236 50% 118 Equinor Frigg 903 76 - - Equinor Frigg Gamma/Delta 442 84 90% 75 Aker BP Frøy 364 41 90% 37 Aker BP Fulla 873 66 40% 26 Aker BP Langfjellet 442 33 90% 30 Aker BP Ri
Slide 68: Targeting an area development at NOAKA
Targeting an area development at NOAKA Significant recoverable resources • Total of ~550 mmboe Aker BP favors a central processing hub (PQ) • Highest value creation • Maximum resource utilisation • Capacity for future discoveries An Aker BP “Field of the Future” • Remote operations • Unmanned
Slide 69: Comparing the development concepts
NOAKA Comparing the development concepts NOAKA PQ Recoverable resources (mmboe) Krafla UPP ~550 ~300 PQ UPP Break-even oil price (USD/bbl) ~41 ~35 0 5 10km PQ UPP 0 5 10km All numbers based on Aker BP estimates as per January 2019 Break-even defined as the oil price necessary to achieve positive NPV
Slide 70: Summary
Summary 70
Slide 71: Profitable growth from existing portfolio
HIGH AMBITIONS FOR VALUE CREATION Profitable growth from existing portfolio 500 EXECUTE Safe and reliable operations 400 NOAKA 300 IMPROVE Reconstructing the way Non-sanctioned 200 we operate GROW 100 Sanctioned Adding profitable barrels - 2018 2019 2020 2021 2022 2023 2024 2025 71
Slide 72: Creating value through exploration
Creating value through exploration Capital Markets Day 2019 Evy Glørstad-Clark SVP Exploration
Slide 73: Factors shaping the exploration strategy
EXPLORATION STRATEGY Factors shaping the exploration strategy Create new growth Significant volumes Discovery sizes Digitalization to expand opportunities yet to be discovered trending lower the opportunity set Text Text Text Text 500 120 Discoveries 100 400 Reserves 9% Yet to find 80 26% 30
Slide 74: The Aker BP exploration formula
EXPLORATION STRATEGY The Aker BP exploration formula Maximize value of Explore for new Smart integration of operated hubs hub potential data and technology 60 % 40 % 74
Slide 75: Unlocking the power of data to identify more opportunities
EXPLORATION STRATEGY Unlocking the power of data to identify more opportunities Risking and decisions Artificial intelligence Processing & interpretation Skilled professionals Smart search & visualization Data sharing Data liberation Data platform 75
Slide 76: Technology supports growth
EXPLORATION STRATEGY Technology supports growth Invest in data around our hubs – Alvheim analogue • Proven to deliver ILX1) value • Rapid and robust field development OBN2) seismic entering NCS exploration • 10-fold increased signal and measure the full wave field • Demonstrate subtle opportunit
Slide 77: Success in the Alvheim area
EXPLORATION PERFORMANCE Success in the Alvheim area New discovery and positive appraisal Discoveries a result of long-term strategy in area, data acquisition and G&G evaluations Frosk proved ~50 mmboe oil (gross) • Pre-drill estimate 3-21 mmboe • Located near Bøyla, tied back to Alvheim • Multil
Slide 78: High value creation from 2018 exploration program
EXPLORATION PERFORMANCE High value creation from 2018 exploration program Estimated value of 2018 exploration program 359 Drilled After tax spending Oil price 10 61 80 USD/bbl wells USD million 280 70 Net P50 discovered Finding cost USD million 60 55 $1.1 218 3.6x mmboe per barrel 50 Estimated value
Slide 79: Large and promising 2019 program
Infrastructure Led Exploration (ILX) EXPLORATION OUTLOOK Growth exploration Large and promising 2019 program Gjøkåsen Aker BP License Prospect Operator Pre-drill mmboe Vågar share PL869 Froskelår Main Aker BP 60 % 45 - 153 Ørn PL869 Froskelår NE Aker BP 60 % 7 - 23 Shrek PL869 Rumpetroll Aker BP 60
Slide 80: Notable wells – ILX opportunities
EXPLORATION OUTLOOK Notable wells – ILX opportunities Froskelår Main Rumpetroll Hod Deep West Interpreted as the same injectite Sand injectite complex near Frosk Play test in Valhall area1) complex as the Frosk discovery discovery1) High chance of success Moderate chance of success Production
Slide 81: Notable wells – growth opportunitites
EXPLORATION OUTLOOK Notable wells – growth opportunitites JK Hornet & Freke-Garm Vågar Low relief structure close to Johan Cluster development potential in known Permian carbonate play in the Sverdrup play type Norwegian Sea Moderate chance of success Moderate chance of success Moderate chance
Slide 82: The Barents Sea – large potential, but limited success so far
EXPLORATION OUTLOOK The Barents Sea – large potential, but limited success so far Large acreage position Large volumes yet to find Hard to unlock Triassic potential Triassic play Barents Sea 5 North 9 Other plays 4 Triassic play Barents Sea 3 South Other plays 7 4 Aker BP licenses in the Barents Sea
Slide 83: Significant value creation potential from 2019 exploration program
EXPLORATION OUTLOOK Significant value creation potential from 2019 exploration program Estimated risked value of 2019 exploration program Oil price USD/bbl Drilling of After tax spending ~500 ~500 70 15 <100 ~100 wells USD million 60 Net risked prospects Finding cost USD million 4.7x 100 <$1 ~312 mm
Slide 84: Aker BP offered 21 new licenses in the 2018 APA round
LICENSING ROUNDS Aker BP offered 21 new licenses in the 2018 APA round New growth opportunities Strengthen ILX potential Balanced exploration portfolio Deep water Tight reservoirs Defining and exploring in new potential Increasing footprint in producing hub APA activity aims to strengthen existing c
Slide 85: Creating value for the future
EXPLORATION Creating value for the future EXECUTE IMPROVE GROW High-potential 2019 Digitalize to improve Large and growing license exploration program with decisions and value portfolio with significant 15 prospects to be drilled creation opportunity set 85
Slide 86: Returning value creation to shareholders
Returning value creation to shareholders Capital Markets Day 2019 Alexander Krane Chief Financial Officer
Slide 87: Allocating capital to drive value
FINANCIAL STRATEGY Allocating capital to drive value Key financial priorities Invest in Maintain sufficient Pay attractive profitable growth financial capacity dividends Production potential – existing portfolio Leverage ratio Dividend plan mboepd net debt/EBITDAX USD million 500 3.0 New dividend pl
Slide 88: Strong cash generation from existing portfolio
INVEST IN PROFITABLE GROWTH Strong cash generation from existing portfolio Current producing fields and sanctioned projects only Production – sanctioned only Capex – sanctioned only1) Free cash flow – sanctioned only2) mboepd USD billion USD billion 250 1.5 2 USD 50/bbl USD 80/bbl 200 1.0 1 150 100
Slide 89: Large opportunity set for organic growth…
INVEST IN PROFITABLE GROWTH Large opportunity set for organic growth… 2P reserves 2C contingent resources On production Other 10% 37% Justified for development Alvheim Area 8% 3% NOAKA 33% 917 mmboe 946 mmboe Ula Area 17% 83% liquids 73% liquids 59% 32% Approved for development Valhall Area Source:
Slide 90: … with highly attractive economics
INVEST IN PROFITABLE GROWTH … with highly attractive economics Break-even for non-sanctioned projects (USD/bbl)1) Internal rate of return for non-sanctioned projects 70 Per 2018-Q4 70% USD 50/bbl oil price Per 2017-Q1 USD 80/bbl oil price 60 USD 35/bbl 60% 50 50% 40 40% 30 30% 20 20% 10 10% 0 0% 0 2
Slide 91: Investing in profitable growth while maintaining flexibility
INVEST IN PROFITABLE GROWTH Investing in profitable growth while maintaining flexibility Capex outlook (USD billion) 2019 capex per asset 3.0 2.5 Other NOAKA 4% 7% 2.0 NOAKA Ula 12% 1.6 USD Valhall 41% 1.5 1.2 Ivar Aasen 4% 1.6 billion Alvheim 9% 1.0 Non-sanctioned Skarv Johan 4% Sverdrup 0.5 19% Sa
Slide 92: Driving down production cost
INVEST IN PROFITABLE GROWTH Driving down production cost Production cost (USD/boe) Production cost forecast 2019 and 2023 by hub 15 40 ~12.5 35 12 12 30 Ula 25 9 USD/boe Sanctioned only 20 6 15 Valhall Ivar Skarv Sanctioned and 10 Aasen non-sanctioned 3 Alvheim 5 Johan Sverdrup - - 2018 2019 2020 20
Slide 93: Stepping up exploration activity in 2019
INVEST IN PROFITABLE GROWTH Stepping up exploration activity in 2019 Exploration spend (USD million) 600 2018 review • 10 exploration wells • Discovered 55 mmboe ~500 • Finding cost per barrel: 500 USD 1.1 after tax 400 2019 plan 359 • 15 wells planned Well cost 300 Well cost Tax efficient • F
Slide 94: Strong P&A performance
INVEST IN PROFITABLE GROWTH Strong P&A performance Abandonment spend (USD million) 300 Strong performance in 2018 • Valhall P&A campaign successfully completed 250 243 2019 plan • Valhall QP decom 200 • Jette P&A • Hod P&A ~ 150 150 2020-23 outlook • Continued decom and P&A Non-sanctioned in t
Slide 95: Increased cash flow from profitable asset portfolio
INVEST IN PROFITABLE GROWTH Increased cash flow from profitable asset portfolio Current producing fields and sanctioned and non-sanctioned projects Production outlook Capex outlook Free cash flow outlook1) mboepd USD billion USD billion 400 3.0 3 USD 50 USD 80 2.5 2 300 2.0 1 200 1.5 0 1.0 100 -1 0.
Slide 96: Strong balance sheet
MAINTAIN SUFFICIENT FINANCIAL CAPACITY Strong balance sheet Leverage ratio Pricing of Aker BP bonds versus oil price Net debt / 12m EBITDAX USD400m bond USD500m bond Brent USD/bbl (RHS) 3.0 106 90 BB+ 104 85 2.5 Ba1 102 80 2.0 100 75 bond price oil price Targeting leverage ratio below ~1.5x 1.5 98 7
Slide 97: Flexible capital structure
MAINTAIN SUFFICIENT FINANCIAL CAPACITY Flexible capital structure High debt capacity – low utilization Debt facilities1) Debt maturity profile Tax-adjusted net debt1) USD million USD million USD billion 2.0 250 400 500 2 050 -2.2 3 050 950 1 000 0.4 950 400 500 0.5 250 2019 2020 2021 2022 2023 2024
Slide 98: Prudent risk management
MAINTAIN SUFFICIENT FINANCIAL CAPACITY Prudent risk management Oil price hedging Insurance Interest rates Buying put options to secure up to All assets insured in the Policy: Up to 60% of gross debt at 100 percent of after-tax production commercial market with S&P rating fixed interest rate va
Slide 99: Managing foreign exchange risk
MAINTAIN SUFFICIENT FINANCIAL CAPACITY Managing foreign exchange risk Locking in NOK liquidity exposure1) P&L effect of revaluation of tax balances 1Q16-3Q181) 5 9.0 150 8.8 4 100 8.6 8.4 50 3 NOK billion USDNOK USD million 8.2 0 2 8.0 -50 7.8 1 7.6 -100 - 7.4 2016 2017 2018 2019 2020 -150 -1.0 -0.5
Slide 100: Leverage ratio scenarios at different oil prices
MAINTAIN SUFFICIENT FINANCIAL CAPACITY Leverage ratio scenarios at different oil prices 1) An approximation 2 1.5 $ 50/bbl 1 $ 65/bbl 0.5 $ 80/bbl 0 2016 2017 2018 2019 2020 2021 2022 2023 Leverage ratio: Net debt/12m EBITDAX 100 1) Effect of oil put options are not included
Slide 101: Returning the value creation to shareholders
PAY ATTRACTIVE DIVIDENDS Returning the value creation to shareholders Dividend policy Dividends (USD million) Ambition to pay out value creation as dividends • Strong cash flow from existing portfolio • Profitable growth from excellent project pipeline 1150 • Strong balance sheet 1050 950 Revise
Slide 102: Guidance summary
FINANCIAL SUMMARY Guidance summary 2018 guidance 2018 preliminary1) 2019 guidance2) 155-160 mboepd Production 155.7 mboepd 155-160 mboepd (lower half) Capex USD 1.25 billion USD 1.20 billion USD 1.6 billion Exploration spend USD 400 million USD 359 million USD 500 million Abandonment spend USD 250 m
Slide 103: Aker BP's key financial priorities
FINANCIAL SUMMARY Aker BP’s key financial priorities Key financial priorities Invest in Maintain sufficient Pay attractive profitable growth financial capacity dividends Production potential – existing portfolio Leverage ratio Dividend plan mboepd net debt/EBITDAX USD million 500 3.0 New dividend pl
Slide 104: Aker BP
& AkerBP www.akerbp.com