Challenges and Opportunities in the Shifting Global Oil & Gas Landscape Rahul Dhir, MD & CEO, Cairn India Limited JM Financial India Conference Mumbai 17 November 2011
3 Agenda 1. Insatiable energy demand requires massive investment 2. Shifting Landscape Growth of NOCs and independents 3. Key to success in this changing environment
4 World energy gy demand will continue to g grow World Energy Demand (Mtoe) 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2008 2015 2020 2030 2035 OECD NonOECD Source: IEA Energy Outlook…
5 Future oil supply challenge Projected global oil demand Capacity Additions 23 MMBPD needed to meet demand growth Barrels per day Capacity Additions needed 49 MMBPD to maintain current level Million B…
6 Massive investment required to develop new sources of supply Investment required in Upstream Investment required in key regions 2010 to 2035 ( Bn) 2010 tto 2035 ( B Bn)) Source: IEA Energy outlook 2010
7 Upstream capital spend has rebounded in response to higher oil price Actual & planned global upstream spending Upstream capital spend, by resource theme Other Conventional 51% Tight Oil 6% Acid Gas 3% CBM 2%…
8 Newer sources of supply more expensive to find and develop Source: DnB NOR Markets - Global EP Spending Report 2011, IEA World Energy Outlook 2009, Schlumberger
9 Exciting new geographies opening up to private capital in last 10 years Large 150 MMboe discoveries (2005-2010) Source IHS
10 Agenda 1. Insatiable energy demand requires massive investment 2. Shifting Landscape Growth of NOCs and independents 3. Key to success in this changing environment
11 Host governments have asserted control over resources 1970 2010 Full IOC Control Russian/Soviet Reserves NOC Reserves (Limited Equity access) NOC Reserves (No equity access) Source: PFC Energy, Oil & Gas Journal, BP…
12 Effective development of resources critical Source: OPEC
14 Independents have opened new basins and plays Source: Wood Mackenzie Exploration Performance Benchmarking, Nov 2010
15 Technology is accessible R&D spend in 2010 as a % of Current Market Cap Baker Hughes Schlumberger Shell BP Exxon Chevron 0.0% 0.5% 1.0% 1.5% 2.0% Source: Company Annual Reports
17 Agenda 1. Insatiable energy demand requires massive investment 2. Shifting Landscape Growth of NOCs and independents 3. Key to success in this changing environment
18 Key to success in this changing environment The Cairn experience Cost Effectiveness Focus on core capabilities Technology and Innovation Adding value for all stakeholders
19 Being low on the cost curve critical for success F&D cost (5 years average) 25 22.2 22.3 20 15 /bbl 10 6.8 5 0 Integrated Oil & Gas Independent Oil & Gas Cairn India Source: Bloomberg Based on selected…
20 Focus is critical to creating shareholder value Sector P/E (1yr fwd) as on November 2011 Value addition Market Cap growth (2007 to 2011) Integrated Oil & Gas Independent Oil & Gas Cairn India Cairn India : Track record of…
21 Technology gy and innovation critical to success SUB-SURFACE CHEMICAL EOR WELL DESIGN & DRILLING SURFACE FACILITIES
22 Adding value for all stakeholders 80% of value accrues to the Government Value Split: RJ-ON-90/1 PSC Rajasthan In-place resource base of 4 bn bbls with additional risked exploration p potential of p 2.5 bn bbls 80% of…
23 Cairn India Poised for Transformation Proven P record d off f fast track, k l low cost development and production World Class Resource base 6.5 6 5 bn barrels + Successful exploration track record Innovative…
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