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February 2012 Strategy Update – BG Group

BG Group · Feb 9, 2012 · 82 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. February 2012 Strategy Update – BG Group – slide 1
    Strategy update London 9 February 2012 West Eminence drill rig Currently drilling offshore Brazil Credit: Seadrill
  2. February 2012 Strategy Update – BG Group – slide 2
    Welcome Sir Robert Wilson Chairman Hasdrubal gas processing plant Tunisia
  3. February 2012 Strategy Update – BG Group – slide 3
    Introduction Sir Frank Chapman Chief Executive Deepsea Metro I drillship En route to Tanzania
  4. February 2012 Strategy Update – BG Group – slide 4
    Legal notice Certain statements included in this presentation contain forward-looking information concerning BG Groups strategy, operations, financial performance or condition, outlook, growth opportunities or circumstances in the…
  5. February 2012 Strategy Update – BG Group – slide 5
    Introduction Distinctive capabilities Market knowledge and commercial agility Exploration performance Fast track development of economic projects Hibiscus production platform Trinidad & Tobago
  6. February 2012 Strategy Update – BG Group – slide 6
    Introduction Agenda Financial performance Outlook for global gas & LNG markets Prospects for global LNG business Exploration & Appraisal performance & resources Fast track development of economic projects Outlook for…
  7. February 2012 Strategy Update – BG Group – slide 7
    Introduction Key messages Outlook for gas & LNG demand is strong Our LNG business is set fair with prospect of excellent profit momentum Ten years of industry leading exploration; ca 1 bn boe of resources in 2011 On track in…
  8. February 2012 Strategy Update – BG Group – slide 8
    Introduction Strategy Global Gas Major Connect gas to Secure competitively high-value markets priced resources Build & access markets Equity reserves Serve customers Contracted resources Skills to succeed across the gas…
  9. February 2012 Strategy Update – BG Group – slide 9
    Introduction Strong value creation Total operating profit ( million) 12000 CAGR 28% 1997-2011 9000 6000 3000 0 1997 2000 2003 2006 2009 2011 Delivering value to shareholders Continuing operations excluding…
  10. February 2012 Strategy Update – BG Group – slide 10
    Financials & outlook Fabio Barbosa Chief Financial Officer Dragon LNG regasification terminal UK
  11. February 2012 Strategy Update – BG Group – slide 11
    Financials & outlook 2011 results 2011 2010 YOY E&P 5 149m 3 766m +37% LNG 2 573m 2 449m +5% T&D 507m 711m -29% Total operating profit 8 209m 6 925m +19% Cash generated by operations 9 773m 8 370m +17% Earnings 4 437m 4…
  12. February 2012 Strategy Update – BG Group – slide 12
    Financials & outlook Capital expenditure 2011 capex: 10.6 billion* 2012-13 capex 22.0 billion on cash basis 2.3 billion non-cash items Includes reduction from planned portfolio rationalisation *9.8 bn at 2011 reference…
  13. February 2012 Strategy Update – BG Group – slide 13
    Financials & outlook Capital expenditure guidance for 2012 Group capital expenditure ( bn) 15 0.4 1.4 1.2 11.0 11.2 10.6 10 5 Prior guidance FX & inflation Other Portfolio 2012 2012 cash basis rationalisation 13
  14. February 2012 Strategy Update – BG Group – slide 14
    Financials & outlook 2011 funding programme Active bond issuance: raised 5.6 bn Average debt maturity extended to over 10 years Undrawn committed facilities to 4.5 bn, extend maturities up to 2016 MoU with Bank of China (up to 1.5…
  15. February 2012 Strategy Update – BG Group – slide 15
    Financials & outlook Capital investment & growth Major investment phase, predominantly funded from own cash flows Production 1 mmboed by 2015, revenues grow to 35 bn Maintaining robust financial structure Top quartile cost…
  16. February 2012 Strategy Update – BG Group – slide 16
    Market knowledge & commercial agility Central business district Beijing, China
  17. February 2012 Strategy Update – BG Group – slide 17
    Market knowledge & commercial agility Global macroeconomic outlook Real annual GDP growth rate ) Global 8% Emerging markets US EU 6% 4% 2% 0% 2012 2013 Long-term -2% Sources: BG Group interpretation of Credit Suisse,…
  18. February 2012 Strategy Update – BG Group – slide 18
    Market knowledge & commercial agility Strong gas demand growth World gas demand (bcma) 5000 ) CAGR 2010-2020 4000 China 11.2% Asia (excluding China) 3.3% 3000 Russia and Central Asia 0.8% Middle East & Africa 4.4% 2000 South…
  19. February 2012 Strategy Update – BG Group – slide 19
    Market knowledge & commercial agility Global gas supply challenge (2010-2020) (bcma) 5000 4000 2.6% pa 900 3000 2400 9.5% pa 1500 2000 3125 1000 0 2010 demand Production decline Demand increase New supply required by…
  20. February 2012 Strategy Update – BG Group – slide 20
    Market knowledge & commercial agility Growing LNG demand in 2025 (mtpa) 100 2009 forecast 2011 forecast 75 50 25 0 Japan China India South Korea Source: BG Group interpretation of Wood Mackenzie 2009 and 2011…
  21. February 2012 Strategy Update – BG Group – slide 21
    Market knowledge & commercial agility Long-term supply challenges Supply prospects for 2020 (mtpa) 600 -17% Speculative Possible 400 Probable Under Construction Onstream 200 0 2007 2011 Source: Wood Mackenzie - LNG…
  22. February 2012 Strategy Update – BG Group – slide 22
    Market knowledge & commercial agility US LNG exports Large low cost shale gas resource Henry Hub outlook: discounted to oil Shorter shipping route to Asia Existing/underutilised GoM import terminals Brownfield sites: capital costs…
  23. February 2012 Strategy Update – BG Group – slide 23
    Market knowledge & commercial agility BG Groups US LNG export business Sabine Pass supply Train 1: 3.5 mtpa, first LNG 2015 Trains 2-4: 2.0 mtpa, 2016-2018 Export authorisation: US trading partners Construction to start in 2012…
  24. February 2012 Strategy Update – BG Group – slide 24
    Market knowledge & commercial agility 30 mtpa within reach 60 LNG contracted volumes (mtpa) 50 Tanzania LNG 40 QCLNG T3 2020 target Lake Charles 30 export 2015 target 20 Sabine Pass 10 0 2005 2010 2015 2020 24
  25. February 2012 Strategy Update – BG Group – slide 25
    Market knowledge & commercial agility LNG business profit momentum Strong volume growth (2014-2018): QCLNG & Sabine Pass Continuation of tight global LNG market Positive effect of reducing LNG hedges; held back 2011 results…
  26. February 2012 Strategy Update – BG Group – slide 26
    Market knowledge & commercial agility BG Groups LNG volumes BG Group volumes (mtpa) 30 25 QCLNG T1 & T2 20 15 Sabine Pass 10 Atlantic Basin 5 0 2013 2014 2015 2016 2017 2018 Future volumes at reference conditions (See…
  27. February 2012 Strategy Update – BG Group – slide 27
    Market knowledge & commercial agility BG Groups LNG sales BG Group sales (mtpa) 30 25 20 15 High value markets 10 5 Henry Hub 0 2013 2014 2015 2016 2017 2018 Future volumes at reference conditions (See Appendix) 27
  28. February 2012 Strategy Update – BG Group – slide 28
    Market knowledge & commercial agility US E&P business Haynesville shale Large, high quality, low cost resource Total resources 5.0 tcf* Developing DeSoto core area Marcellus shale Marcellus Total resources 3.0 tcf** Less…
  29. February 2012 Strategy Update – BG Group – slide 29
    Market knowledge & commercial agility Industry leading performance Haynesville average well production (mmscfd) 12 BG Group (126 wells) 8 Competitors (375 wells) 4 0 1 year Sources: BG Group interpretation of…
  30. February 2012 Strategy Update – BG Group – slide 30
    Market knowledge & commercial agility Flexible US production Outlook for long run US gas prices lowered External forecasts: 4-6 mmbtu Supply & demand factors keeping current prices particularly low Substantially reducing drilling…
  31. February 2012 Strategy Update – BG Group – slide 31
    Market knowledge & commercial agility Summary Outlook for gas & LNG demand is strong Markets important to BG Group generally remaining tight Combined US businesses well placed to extract value from shale gas success Meeting 2015…
  32. February 2012 Strategy Update – BG Group – slide 32
    Exploration performance Deepsea Stavanger drill rig Tanzania Credit: Odfjell drilling
  33. February 2012 Strategy Update – BG Group – slide 33
    Exploration performance A global leader in exploration Value creation, bn IRR Reserve replacement ratio 0 10 20 30 40 115 0% 500% 1000% 0% 20% 40% 60% 80% Majors Majors Majors Sustained, top quartile value creation Source:…
  34. February 2012 Strategy Update – BG Group – slide 34
    Exploration performance Resource additions (mmboe) 1 bn boe resource added in 2011 10000 ca 10 bn boe added over last 10 years ca 9 bn coming from drill bit Low organic finding cost 5000 1/boe of resource 0 2011 2002 to…
  35. February 2012 Strategy Update – BG Group – slide 35
    Exploration performance Prospect inventory Norway Other Trinidad Grown by 12% pa over last 10 years UK Australia Thailand Net risked resources of 3.8 bn boe Egypt 75% operated by BG Group China Total gross unrisked resources…
  36. February 2012 Strategy Update – BG Group – slide 36
    Exploration performance E&A programme Global 2012 E&A operations 2011 Highlights UK Brazil material resource upgrades 2 wells 4 wells USA Egypt Tanzania success; Kenya new large acreage 6 - 8 wells 1 - 2 wells UK & Norway…
  37. February 2012 Strategy Update – BG Group – slide 37
    Exploration performance New opportunity in Egypt BG Group interests High equity operated position BG Group Oligocene prospects & leads New potential in established Pliocene play El-Burg Offshore New Oligocene play Notus Oligocene…
  38. February 2012 Strategy Update – BG Group – slide 38
    Exploration performance Major new gas province: East Africa 31 000 sq km (155 UKCS blocks) Kenya Block L-10A Tanzania First campaign: 3 Tertiary gas discoveries Block L-10B High quality reservoirs Total resources 3 tcf…
  39. February 2012 Strategy Update – BG Group – slide 39
    Exploration performance Tanzania: multiple play types Two delta systems Chewa-1 Rufiji in north Pweza-1 Rovuma in south Block 4 3-4 exploration wells in 2012 Block 3 Add Tertiary resources Test deeper high potential Cretaceous…
  40. February 2012 Strategy Update – BG Group – slide 40
    Exploration performance Multiple exploration plays in Australia Surat CSG: E&A to increase resources Mackay 1.2 tcf net risked exploration Exploring CSG in Bowen Cooper Basin 4.7 tcf net risked exploration Existing pipeline…
  41. February 2012 Strategy Update – BG Group – slide 41
    Exploration performance Australia: Bowen deep gas sands N S Deep gas sands play 000 metres Potential for QCLNG Expansion Supply QCLNG 2.3 tcf net risked exploration Train 1 & 2 0 Under Surat basin development Surat CSG 2011…
  42. February 2012 Strategy Update – BG Group – slide 42
    Exploration performance Australia reserves & resources BG Group gross reserves & resources (tcf) 30 Risked exploration Discovered resources Probable reserves 20 Proved reserves Contracted third party gas 10 0 Feb 2008…
  43. February 2012 Strategy Update – BG Group – slide 43
    Exploration performance Brazil reserves & resources BG Group net reserves & resources* (bn boe) 10 Upside potential 5 0 2006 2007 2008 2009 2010 2011 *BG Group view, not the Operator or relevant Consortium 43
  44. February 2012 Strategy Update – BG Group – slide 44
    Exploration performance Reserves replacement BG Groups reserves replacement 3 year reserves replacement 1 year total 251% proved RRR 3 year total 212% proved RRR BG 2009-2011 (1) BG 2009-2011 (2) Peer 2008-2010 1 year…
  45. February 2012 Strategy Update – BG Group – slide 45
    Exploration performance Top quartile E&P benchmarking 3 year unit F&D cost (/boe) Annual unit opex cost (/boe) BG 2011 BG 2009-2011 BG 2010 BG 2008-2010 Peer 2010 Peer 2008-2010 0 20 40 60 0 10 20 Source (2008-2010):…
  46. February 2012 Strategy Update – BG Group – slide 46
    Exploration performance Total reserves & resources Total reserves & resources (mmboe) CAGR 14% Total reserves & resources/ production* 18000 17130 16180 14494 3784 73 years 3707 13126 3433 12000 3562 10046 57 years 6160…
  47. February 2012 Strategy Update – BG Group – slide 47
    Exploration performance Summary BG Group has delivered ten years of industry leading exploration Added ca 1 bn boe of resources in 2011 Continuing robust proved reserves replacement Optimising capital efficiency and maximising…
  48. February 2012 Strategy Update – BG Group – slide 48
    Fast track development of economic projects Main pipeline network for QCLNG project 48 Queensland, Australia
  49. February 2012 Strategy Update – BG Group – slide 49
    Fast track project development Australia: four integrated projects Curtis Island Upstream QCLNG plant Initial 2000 wells Gladstone Gas & water treatment facilities 540 km of main pipeline network Connecting gas fields to Curtis…
  50. February 2012 Strategy Update – BG Group – slide 50
    Fast track project development Australia upstream progress Gross 2P reserves now 9.9 tcf Further 0.9 tcf 3rd party purchases Over 700 wells drilled to date 2000 wells by 2014 Ramping up from 4 to 11 rigs in 2012 All 2012 rig…
  51. February 2012 Strategy Update – BG Group – slide 51
    Fast track project development Australia pipeline progress 42 diameter, 600lb rated pipeline 347 km export pipeline 196 km gas collection header Capacity 1360 mmscfd Expandable with compression All pipe in country 189 km cleared…
  52. February 2012 Strategy Update – BG Group – slide 52
    Fast track project development Australia LNG plant progress EPC schedule on track Construction dock piling complete Storage tank construction ongoing Structural concrete production ongoing Structural steel assembly ongoing…
  53. February 2012 Strategy Update – BG Group – slide 53
    Fast track project development Australia summary Making good progress on ground Drilling being ramped up significantly to 11 rigs 150 km of main pipeline has been placed & is being welded Curtis Island: site has been prepared,…
  54. February 2012 Strategy Update – BG Group – slide 54
    Fast track project development Strong economics from QCLNG Train 1 & 2 15 tcf of gross resources* 8 mtpa plant throughput Competitive unit costs Upstream** capex: 8/boe, 75% of total project cost Upstream opex: 11/boe (including…
  55. February 2012 Strategy Update – BG Group – slide 55
    Fast track project development Australia production outlook BG Group net production* (000s boed)) Net plateau production ca 215 kboed* from first phase 250 Partner/ Other gas supplying QCLNG Train 3 200 Continuing with…
  56. February 2012 Strategy Update – BG Group – slide 56
    Brazil FPSO Cidade de Sao Vicente Santos Basin, Brazil
  57. February 2012 Strategy Update – BG Group – slide 57
    Fast track project development Brazil: world class resources Oil production, mmbod Wells 3 2500 UK Northern & Central North Sea 2000 2 1500 Santos Basin 1000 1 fields** 500 0 0 0 5 10 UK Northern & Santos Basin…
  58. February 2012 Strategy Update – BG Group – slide 58
    Fast track project development FPSO 1 performing better than expected Offloading from the FPSO CAR 15 mmboe gross production to date 13 mmboe from single well 3 producer wells connected to FPSO Exceptional well deliverability…
  59. February 2012 Strategy Update – BG Group – slide 59
    Fast track project development FPSOs 2-5 on schedule & lower cost Unit cost trend FPSO 2: Sapinho ) 120 kbod capacity, over 80% complete 100% In Brazil for topside installation On stream early 2013 FPSO 3: Lula NE 120 kbod…
  60. February 2012 Strategy Update – BG Group – slide 60
    Fast track project development FPSOs 6-13 exceeding LC requirement Dedicated 8 FPSOs for BM-S-9 & 11 Over 40% contracted Costs in-line with international benchmarks Fully contracted in 2012 FPSO 6: welding of hull underway LC…
  61. February 2012 Strategy Update – BG Group – slide 61
    Fast track project development Brazil summary Making rapid progress 1 bn boe* is to be produced from the FPSO 1 location over field life Exceptional reservoir characteristics Confirmed by appraisal & testing results Production to…
  62. February 2012 Strategy Update – BG Group – slide 62
    Fast track project development Improving drilling performance Spud to total depth times Depth (metres) Time (days) 0 50 100 150 0 1000 2000 3000 4000 Lula 2006 discovery well: 141 days 5000 6000 Best composite: 34 days*…
  63. February 2012 Strategy Update – BG Group – slide 63
    Fast track project development Improving drilling costs Building up to more than 40 wells pa Plan to adopt Deepwater assembly line approach Using specialist rigs & crews on different well sections JVs secured 80% of rigs needed…
  64. February 2012 Strategy Update – BG Group – slide 64
    Fast track project development Oil & gas exports commenced 2 DPST cargoes in 2011, 7 planned for 2012 Cabinas RIO DE JANEIRO 4 DPSTs contracted, 2013-14 delivery SO PAULO Buoy Buoy BG oil transhipment facility, sanction 2012 FSO…
  65. February 2012 Strategy Update – BG Group – slide 65
    Fast track project development Higher net production forecast BG Group net production (000s boed) Average recovery per well Almost doubled since 2008 600 Increasing net production forecast for 2020 From 550 to over 600* kboed 450…
  66. February 2012 Strategy Update – BG Group – slide 66
    Fast track project development Summary On track in Australia for first LNG in 2014 On track in Brazil to deliver 2.3 mmboed of capacity by 2017 66
  67. February 2012 Strategy Update – BG Group – slide 67
    Production outlook Armada platform UK
  68. February 2012 Strategy Update – BG Group – slide 68
    Production outlook Base asset production BG Group net production excluding Australia, Brazil & US (000s boed) 900 Decline rate of 3.9% pa between 2011 to 2020 (Onstream + Growth) 600 Growth Fields currently onstream…
  69. February 2012 Strategy Update – BG Group – slide 69
    Production outlook Production growth BG Group net production (000s boed) 1600 Risked exploration US L48 8% Australia 1200 Brazil Base 6% 800 400 0 2005 2010 2015 2020 Future production volumes excluding any potential…
  70. February 2012 Strategy Update – BG Group – slide 70
    Production outlook 2012 production Enter year at 650 kboed Exit year at 750 kboed Improved production from UK 6 new projects coming onstream through 2012 WDDM 7b, Bongkot South, Gaupe, Margarita 1, WDDM 8b & Jasmine 70
  71. February 2012 Strategy Update – BG Group – slide 71
    Conclusion North Everest platform with supply vessel UK
  72. February 2012 Strategy Update – BG Group – slide 72
    Key messages Outlook for gas & LNG demand is strong Our LNG business is set fair with prospect of excellent profit momentum Ten years of industry leading exploration; ca 1 bn boe of resources in 2011 On track in Australia for first…
  73. February 2012 Strategy Update – BG Group – slide 73
    Strategy update London 9 February 2012 West Eminence drill rig Currently drilling offshore Brazil Credit: Seadrill
  74. February 2012 Strategy Update – BG Group – slide 74
    Appendix Santos Basin: BM-S-9 &11 activity in 2012 BM-S-11 (Lula/Cernambi) 12 wells Rio de Janeiro 11 DSTs 2 EWTS BM-S-11 (Iara) 2 wells 2 DSTs BM-S-9 (Sapinho) BM-S-52 BM-S-10 4 wells BM-S-11 Iara 2 DSTs Cernambi 1…
  75. February 2012 Strategy Update – BG Group – slide 75
    Appendix UK BG Group net production (000s boed)) UK 2P reserves growth in producing fields 200 Net gain 136 mmboe since 2008 Jackdaw appraisal well success 150 50 mmboe Well test in 2012 Development options under evaluation 100 Armada…
  76. February 2012 Strategy Update – BG Group – slide 76
    Appendix Egypt WDDM project delivery Phase 7a pipeline on stream Phase 7b onshore compression onstream Phase 8a onstream WDDM Phase 7 Phase 8b drilling ongoing, first gas 2012 Rashpetco, Idku, Egypt Phase 9a sanction 2012…
  77. February 2012 Strategy Update – BG Group – slide 77
    Appendix Kazakhstan Fourth train on stream in 2011 Total of 10.3 mtpa export specification oil Achieved record western sales throughput Significant new development opportunities Only 8.4% of HIIP produced to date Government…
  78. February 2012 Strategy Update – BG Group – slide 78
    Appendix Thailand BG Group net production (000s boed)) Bongkot North (BG 22.2%) 40 Further plateau extension 4-7 E&A wells in 2012 Bongkot South Bongkot South (BG 22.2%) Processing complex in place 20 Commissioning Q1 2012…
  79. February 2012 Strategy Update – BG Group – slide 79
    Appendix Trinidad & Tobago Successful sanctioned projects Central Block compression: first gas 2012 NCMA 4a compression: first gas 2014 Supporting medium term delivery Hibiscus platform, NCMA Trinidad & Tobago Starfish first gas…
  80. February 2012 Strategy Update – BG Group – slide 80
    Appendix Production: key projects 2012 2013 to 2014 2015 onwards First Half Cernambi FPSO 1 Block 5c Bongkot South KGK wells Brazil FPSOs Gaupe Knarr Bream Margarita 1 Lula FPSO 2 Jackdaw WDDM Ph 7b Margarita Ph 2 KGK projects /…
  81. February 2012 Strategy Update – BG Group – slide 81
    Appendix Definitions Increase or (decrease) Contracted Volumes which BG Group has a right to United States dollar volumes receive over a period of more than 12 months A Australian dollar CPC Caspian Pipeline Consortium Greater than…
  82. February 2012 Strategy Update – BG Group – slide 82
    Appendix Definitions (continued) IRR Internal Rate of Return Psi Pounds per square inch JV Joint Venture QCLNG Queensland Curtis LNG k Thousands QGC QGC Pty Limited kboed Thousand barrels of oil equivalent per day RRR Reserves…

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