Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Lehman Energy Conference, New York 2005
32 slides from Norsk Hydro Asa's conference presentation, Sep 8, 2005
Slide 1: Hydro Oil & Energy
Hydro Oil & Energy Lehman Energy Conference, New York www.hydro.com David W. Nunn, Senior Vice President, Corporate Portfolio Strategy 2005-09-08
Slide 2: Forward-Looking Statements / Use of Non-GAAP Financial Measures
2 Forward-Looking Statements/ Use of Non-GAAP Financial Measures In order to utilize the “safe harbour" 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 statemen
Slide 3: Cautionary Note
3 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 exi
Slide 4: Financial overview – 2004
Financial overview – 2004 Operating revenues – USD 23 bill. EBITDA – USD 7,6 bill. Other Other 2% Aluminium 1% 17 % Oil & Energy 47 % Aluminium 51 % Oil & Energy 82 % Capital Employed – USD 12,8 bill. Other 7% Oil & Energy 42 % Aluminium 51% Page 4
Slide 5: 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 2004 2008E 1998 2004 2010E Page 5
Slide 6: 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 7: 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 7
Slide 8: 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 8
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 custom segments High growth in smelting 2004 - 2020 2004 - 2020 2004 - 2020 Aluminium demand Demand increase Aluminium production increase Mtpy Percent Mtpy Transportation 35 CAGR 28 7 Electrical 4.6 Consumer d
Slide 11: Aluminium Qatar – project description
Aluminium Qatar – project description z Heads of agreement signed z Annual capacity - 570 000 tonnes - Expansion potential up to 1 200 000 tonnes z Investments - Smelter and casthouse: USD 2 – 2.5 billion Excellent location - Power plant: USD 0.7-0.8 billion z Hydro 50% ownership - Hydro to market t
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: 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 13
Slide 14: Strong production growth based on attractive project portfolio
Strong production growth based on attractive project portfolio Oil price giving 10% real rate of return post tax* Oseberg S Operator IOR NCS Njord Operator Development Phase Oseberg Operator NCS Oseberg E International Troll Partner operated NCS Ormen Lange Tune Phase 2 Oseberg S J C Vilje Oseberg S
Slide 15: Strong growth in equity gas production
Strong growth in equity gas production bcm 16 14 12 10 8 6 4 2 0 2003 2004 2005 2006 2007 2008 Page 15
Slide 16: The Ormen Lange development concept
The Ormen Lange development concept Nyhamna plant Hydro’s technologies and expertise make a difference Gas export 42% complete Multiphase transport Steep and uneven terrain Seabed development (850-1100m deep) Page 16
Slide 17: 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 18: 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 19: 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 new development projects z Preparing for important 19th round Page 19
Slide 20: Creating value by integrating new technologies
Creating value by integrating new technologies M bbl 1447 Troll 300 1500 1408 1358 = 1328 1900 mill. bbl 1225 Resources 1164 Production 1000 945 649 500 385 353 277 208 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Test prod. PDO Troll B PDO Prod
Slide 21: 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 22: NCS: 21 billion barrels left to discover
NCS: 21 billion barrels left to discover Barents Sea: 6.2 billion barrels High risk – high potential Oil-play potential Norwegian Sea: 7.7 billion barrels High risk – medium/high potential North Sea: 7.5 billion barrels Moderate risk – smaller structures High value per barrel Source: NPD Page 22
Slide 23: Hydro – priorities
Hydro – priorities z Operational improvements z First-class project execution z Improve Aluminium profitability z Strengthen oil & gas resource base Page 23
Slide 24: Hydro company description
Hydro is a Fortune 500 energy and aluminium supplier with 36,000 employees in more than 40 countries. For almost 100 years, our Norwegian heritage has influenced Hydro’s approach to value creation. In our view, business performance and societal needs are inseparable and interdependent. We take pride
Slide 25: Additional information
Additional information www.hydro.com
Slide 26: Key facts Ormen Lange and Langeled project
Key facts Ormen Lange and Langeled project Total field & pipeline investments NOK 66 bn (2003) (9,5 bn USD) Profitable Above $13/bbl > 10% IRR after tax Production start Ormen Lange October 2007 Operations start Langeled October 2006 Recoverable gas reserves 397 Bcm (14 TCF) Recoverable condensate 2
Slide 27: Canada
Canada Mature area opportunities in highly profitable portfolio Existing portfolio Hibernia and Terra Nova optimization Hebron development solution Exploration Near infrastructure led exploration Mature current licence portfolio Assess risk/volume in immature basins Acquiring resources Increase tech
Slide 28: Angola
Angola Diversified opportunities in profitable growth portfolio Existing portfolio Girassol and Jasmim optimizations Dalia/Rosa development projects 3rd production hub selection Exploration Commercialize Block 4 discovery Alternative potential in Block 34 New opportunities with Sonangol P&P Signific
Slide 29: Russia
Russia Legacy asset opportunities through long-term commitment Existing portfolio Further development of Kharyaga Exploration Pursuing business opportunities Acquiring resources Shtokman Co-operation with Gazprom on the development concept Page 29
Slide 30: Libya
Libya Existing exploration potential in long-term core area Existing portfolio Mabruk developments Murzuq developments Exploration Exploration drilling Co-operation with Wintershall EPSA exploration round V Acquiring resources Actively pursuing additional value creating growth opportunities Page 30
Slide 31: Iran
Iran Exploring for oil in key petroleum province Exisiting portfolio Anaran exploration acreage Exploration Azar well with positive progress Khoramabad contract bid submitted Page 31
Slide 32: Gulf of Mexico
Gulf of Mexico Commercial mindset and deep-water competence Existing portfolio Telemark development (operator) Lorien development (non operator) Exploration Lorien Telemark Successful lease sales Operator blocks Acquiring resources Actively pursing additional value creating growth opportunities Page
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