Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Pareto Energy Conference 2005
24 slides from Norsk Hydro Asa's conference presentation, Aug 31, 2005
Slide 1: Hydro
Hydro John O. Ottestad CFO Oslo, 31 August 2005 Pareto Energy Conference, Holmenkollen Park Hotel www.hydro.com
Slide 2: Highlights
Highlights z Hydro reshaped z Strong operational performance z Improved macro environment z Solid financials Page 2
Slide 3: Consistently delivering profitable growth
Consistently delivering profitable growth Oil and gas production Aluminium production 1 000 boe/day 1 000 tonnes 750 2000 1500 500 1000 250 500 0 0 1998 2003 2008E 1998 2003 2010E Page 3
Slide 4: Total Shareholder Return
Total Shareholder Return 2004 2000-2004 Hydro 46 % Hydro 139 % Statoil 44 % Total 100 % BG 34 % BG 70 % ExxonMobil 28 % ChevronTexaco 44 % ChevronTexaco 26 % ExxonMobil 43 % Total 26 % Alcan 30 % BP 24 % Shell 23 % Shell 20 % RoyalDutch 14 % BP 15 % Alcan 6% RoyalDutch 12 % Alcoa -16 % Alcoa -17 % -
Slide 5: Financial overview 2004
Financial overview 2004 Operating revenues - NOK 155bn EBITDA – NOK 51bn Other 2% Aluminium 17 % Aluminium 51 % Oil & Energy Other 47 % Oil & 1% Energy 82 % Capital Employed - NOK 86bn Other 7% Oil & Energy 42 % Aluminium 51 % Page 5
Slide 6: RoaCE by business area
RoaCE by business area Oil & Energy Aluminium 23,4 % Adjusted for German writedown* Realized 16,2 % 11,6 % 7.0 % 4.7 % 2.7 % 3.5 % 2002 2003 2004 2002 2003 2004 Page 6
Slide 7: Debt/equity ratio
Debt/equity ratio 0.6 Target: 0,5 0.38 0.14 0.11 2002 2003 2004 2005 Q2 Interest-bearing debt + net pension liability (tax adjusted) + operating lease commitments (discounted) – cash and cash equivalents – other liquid assets divided by shareholders’ equity + minority interest Page 7
Slide 8: Oil market Aluminium market
Oil market Aluminium market z High oil price – supply concerns z In balance z OPEC – low spare capacity z Refineries – bottlenecks in the market Million bbl/day USD per bbl Aluminium inventories (days of consumption) Aluminium price (LME 3m) 5 60 2,200 70 65 50 2,000 4 60 55 USD per tonne 40 1,800 3
Slide 9: Aluminium – highlights
Aluminium – highlights z Strong primary metal market fundamentals z Mixed development downstream z Planning new world-class plant in Qatar z Intensified restructuring - decision to close primary capacity Page 9
Slide 10: The industry provides attractive opportunities
The industry provides attractive opportunities Fast-growing regional markets Fast-growing customsegments High growth in smelting 2004 - 2020 2004 - 2020 2004 - 2020 Aluminium demand Demand increase Aluminium production increase Mtpy Percent Mtpy 35 Transportation CAGR 28 7 Electrical 4.6 Consumer du
Slide 11: Qatar – project description
Qatar – project description z Heads of agreement signed z Hydro 50% ownership z Annual capacity - 570 000 tonnes - Expansion potential up to 1 200 000 tonnes Excellent location z Investments - Smelter and casthouse: USD 2 – 2.5 billion - Power plant: USD 0.7-0.8 billion z Production start-up end 200
Slide 12: Oil & Energy
Oil & Energy z One of the most efficient North Sea operators z Continued strong production growth z Exploration activity bearing fruit z Adding value by applying world class competence Page 12
Slide 13: Increasing our international presence
Increasing our international presence North Sea z Increased exploration activity paying off - Oseberg, Troll Russia - Peon, Astero Canada z Shtokman proposal z Hebron proceeding z Ormen Lange on track submitted Russia towards development z Ambitious IOR program z MoUs with Gazprom on z New acreage s
Slide 14: Continued strong production growth
Continued strong production growth 1 000 boe/day 8% average annual growth* 800 700 600 500 400 300 200 100 0 1998 1999 2000 2001 2002 2003 2004 2005E 2006E 2007E 2008E Oil NCS Oil Int Gas 8% CAGR* *Compound Annual Growth Rate, 2001 baseline Page 14
Slide 15: Three paths to future growth
Three paths to future growth z Existing portfolio - Increased recovery - Develop technical resources Acquisitions Exploration z Exploration - Increase predictability - Exploit infrastructure position - Entry in new regions Existing portfolio z Acquisitions - Utilize our competence - Capital discipli
Slide 16: Developing the Norwegian Continental Shelf
Developing the Norwegian Continental Shelf The Hydro Troll field development z Development projects on plan z Ambitious IOR projects z Submitted four new development projects in 2005 z Preparing for important 19th round Page 16
Slide 17: Exploration strategy paying off
Exploration strategy paying off Discoveries 2005 Peon z North Sea discoveries 2005 - Astero Vigdis Astero - Peon - Troll Brent Troll Brent - Oseberg South - B South Oseberg Sør B Oseberg Sør J - Oseberg South - J Central - Vigdis M5 z International discoveries 2005 - Angola - Denmark - Iran z Ambiti
Slide 18: Promising potential in Iran
TEHRAN Anaran Khorramabad AFGHANISTAN IRAQ IRAN KUWAIT PAKISTAN Promising potential in Iran z Azar discovery – Anaran - Promising flow tests - Commerciality studies ongoing - Exclusive right to negotiate a development contract - Exploration drilling to start on nearby structure in Q3 z Successful bi
Slide 19: Performance: We're on top of our projects
Performance We’re on top of our projects z Projects worth USD 15 billions from 1998 delivered on time and cost z Latest oil development on NCS delivered ahead time and below cost z Ormen Lange/ Langeled – on track Page 19
Slide 20: The Ormen Lange development concept
The Ormen Lange development concept Nyhamna plant Hydro’s technologies and expertise make a difference Gas export Multiphase transport Steep and uneven terrain Seabed development (850-1100m deep) Page 20
Slide 21: Hydro – priorities
Hydro – priorities z Operational improvements z First-class project execution z Improve Aluminium profitability z Strengthen oil & gas resource base Page 21
Slide 22: Forward-looking statements/ use of non-GAAP financial measures
Forward-looking statements/ use of non-GAAP financial measures In order to utilize the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, Hydro is providing the following cautionary statement: This presentation contains certain forward-looking statements
Slide 23: Cautionary Note
23 Cautionary Note The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under ex
Slide 24: Page 24
Hydro is a Fortune 500 energy and aluminium supplier founded in 1905, with 36,000 employees in nearly 40 countries. We are a leading offshore producer of oil and gas, the world's third-largest integrated aluminium supplier and a pioneer in renewable energy and energy- efficient solutions. As we look