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March 2010 Strategy Presentation – BP Plc

BP Plc · Mar 2, 2010 · 68 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. March 2010 Strategy Presentation – BP Plc – slide 1
    BP Strategy Presentation London 2 March 2010
  2. March 2010 Strategy Presentation – BP Plc – slide 2
    Tony Hayward Group Chief Executive
  3. March 2010 Strategy Presentation – BP Plc – slide 3
    Todays agenda Introduction Tony Hayward Environment Progress so far Whats next Exploration & Production Andy Inglis Refining & Marketing Iain Conn Conclusions Tony Hayward Q&A 4
  4. March 2010 Strategy Presentation – BP Plc – slide 4
    Long-term energy outlook Energy consumption to 2030 400 Demand 300 Non-OECD Mboed Growth resumes post 200 recession Driven by non-OECD 100 OECD Evolution to lower-carbon 0 2000 2010 2020 2030 economy 400 Supply 300…
  5. March 2010 Strategy Presentation – BP Plc – slide 5
    BPs approach to a lower-carbon future Energy efficiency within BP operations Including the price of carbon in investment decisions Promoting lowest-cost energy pathways e.g. gas for power generation Continued investment in…
  6. March 2010 Strategy Presentation – BP Plc – slide 6
    Upstream: uncertain price environment 160 28 140 24 Natural Gas-Henry Hub /mmbtu 120 20 100 Brent /bbl 16 80 12 60 8 40 20 4 0 0 2004 2005 2006 2007 2008 2009 2010 7
  7. March 2010 Strategy Presentation – BP Plc – slide 7
    Downstream: refining margins and utilization 12 87 9.9 10 86 Global Indicator Margin /bbl 8.6 8.5 85 Global Utilization(1) % 8 6.4 6.5 84 6 4.5 4.4 83 4.1 4.0 4 82 2.2 2.2 2 81 0 80 2000 2001 2002 2003…
  8. March 2010 Strategy Presentation – BP Plc – slide 8
    Forward Agenda Safe and reliable operations Continue journey in personal safety Implement Operating Management System Compliance People Building capability Leadership and behaviours Performance Restore revenues Reduce complexity…
  9. March 2010 Strategy Presentation – BP Plc – slide 9
    Safe, reliable and efficient operations Recordable Injury Frequency Integrity Management Major Incidents(1) 1.5 35 30 Industry range 1.0 - six majors 25 20 15 0.5 10 5 0.0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2004…
  10. March 2010 Strategy Presentation – BP Plc – slide 10
    People and organization Leadership and culture Restructuring and delayering Skills and capability Diversity and inclusion Reward for performance Changing the culture 11
  11. March 2010 Strategy Presentation – BP Plc – slide 11
    Restoring revenues Production Rolling 4-quarters to 4Q09 Refining availability(1) 100% 4500 95% BP 4000 ExxonMobil 90% 3500 mboed 85% Shell 3000 80% Chevron 2500 75% Total 2000 70% 1Q00 1Q01 1Q02 1Q03 1Q04…
  12. March 2010 Strategy Presentation – BP Plc – slide 12
    Controlling cash costs Cash costs - indexed (Total BP Group) 150 140 130 120 110 100 90 80 2004 2005 2006 2007 2008 2009 A definition of cash costs can be found on our website at www.bp.com 13
  13. March 2010 Strategy Presentation – BP Plc – slide 13
    2009 momentum versus peers Underlying Net Income bn(1) 14.6 19.2 11.6 9.5 10.9 Year on Year % -44% -56% -59% -58% -47% Cash from Operations bn 27.7 28.4 21.0 19.4 17.2 Year on Year % -27% -52% -52% -35% -37% Reported Volumes mboed…
  14. March 2010 Strategy Presentation – BP Plc – slide 14
    Strategic progress in 2009 E&P New access: Iraq, Indonesia, Jordan, new acreage in US Gulf of Mexico and Egypt Exploration and appraisal success: Tiber, Mad Dog South, Angola Block 31 Major projects: 7 start-ups and 2 sanctioned…
  15. March 2010 Strategy Presentation – BP Plc – slide 15
    Portfolio quality Efficient and successful explorer Strong reserve replacement Robust medium-term growth track record (1) (excluding oil sands, using year-end pricing) 5 Majors' relative performance 2004 - 2008 120% 5-Year…
  16. March 2010 Strategy Presentation – BP Plc – slide 16
    The opportunity Earnings vs Peers ROACE vs Peers Refining efficiency Underlying net income gap bn Underlying ROACE Refining performance 5 100 40% 2012 95 2004 0 35% 2009 Solomon Availability % 90 30% Other (5) Supermajors…
  17. March 2010 Strategy Presentation – BP Plc – slide 17
    Realising the opportunity Capital efficiency Cost efficiency Technology Culture 18
  18. March 2010 Strategy Presentation – BP Plc – slide 18
    Andy Inglis Chief Executive, Exploration & Production
  19. March 2010 Strategy Presentation – BP Plc – slide 19
    Leadership positions in the worlds most prolific hydrocarbon basins 320mboed 940mboed 680mboed North Sea TNK-BP North America Onshore 570mboed N. Africa, Middle East 460mboed and Caspian 440mboed Gulf of Mexico Trinidad &…
  20. March 2010 Strategy Presentation – BP Plc – slide 20
    2009 exploration and access CANADA EGYPT Ellice J-27 Nile Delta BP (25%) 2,900km2 net in two blocks JORDAN Risha 7,000km2 block US SHALE GAS Eagle Ford IRAQ New 5tcf position Rumaila Redevelopment of supergiant PAKISTAN…
  21. March 2010 Strategy Presentation – BP Plc – slide 21
    Sustaining a leading track record BP net resource additions as Majors' relative performance discovered / accessed 20042008 4 5 Resource play* Extensions BP net resource additions bnboe New discoveries BP 4 Discovered…
  22. March 2010 Strategy Presentation – BP Plc – slide 22
    Resources to reserves to production Exploration and Access Prospect Inventory Exploration Discovered Field Extensions and Start 2005 Discoveries Resource Access Improved Recovery End 2009 38.9 bn boe Non-proved Resources 45.3…
  23. March 2010 Strategy Presentation – BP Plc – slide 23
    Diverse resource base and reserves additions 2009 Resource Base 2009 Reserves Additions % Conventional oil Proved: 18.3 bn boe TNK-BP Asia Pacific Deepwater oil 12 years Angola Water-flood Gulf of Mexico viscous and heavy oil…
  24. March 2010 Strategy Presentation – BP Plc – slide 24
    Growth to 2015 mboed 5,000 TNK-BP Angola 4,000 Gulf of Mexico Asia Pacific 3,000 South America 2,000 N. Africa, Middle East and Caspian Trinidad & Tobago 1,000 North Sea 0 North America Onshore 2008 2009 2010 2011…
  25. March 2010 Strategy Presentation – BP Plc – slide 25
    Planned Final Investment Decisions 201011 2010 Project FIDs 2011 Project FIDs Tubular Bells Gulf of Mexico Block 18 West Angola Mars B Gulf of Mexico Block 31 SE Angola Atlantis Phase 2 Gulf of Mexico Shah Deniz FFD* Azerbaijan…
  26. March 2010 Strategy Presentation – BP Plc – slide 26
    Project start-ups 20102015 North Sea Skarv * Russia (TNK-BP) Valhall Redevelopment * Russkoye Alaska Devenick * Suzun Liberty * Canada Kinnoull * Verkhnechonskoye FFD Canada Noel * Clair Ridge * Sunrise WoS Q204 * Azerbaijan Gulf…
  27. March 2010 Strategy Presentation – BP Plc – slide 27
    Capital investment 20052010 Organic capital expenditure bn 20 15 Pan American Energy 10 TNK-BP 5 BP 0 2005 2006 2007 2008 2009 2010 Organic Capital Expenditure above excludes: 2006 Rosneft; 2007 asset exchanges with…
  28. March 2010 Strategy Presentation – BP Plc – slide 28
    Growth beyond 2015 Deepwater Gas Giant Fields (Unconventional) 29
  29. March 2010 Strategy Presentation – BP Plc – slide 29
    Leading deepwater company 700 600 500 400 mboed 300 200 100 0 2009 net production. Source: Wood MacKenzie Deepwater refers to all fields in 500m water depth 30
  30. March 2010 Strategy Presentation – BP Plc – slide 30
    Gulf of Mexico further growth potential New Orleans Gulf of Mexico Production to 2020 500 Ram Houston New Hubs Powell Production mboed Horn Mtn. Subsea Nile Tiebacks Marlin Thunder Horse Thunder Horseand and Atlantis…
  31. March 2010 Strategy Presentation – BP Plc – slide 31
    Global gas Alaska Gas Skarv Devenick Rospan Harding Area Gas Noel Culzean Wamsutter San Juan WND Shah Deniz FFD Fayetteville Libya Gas Coal Bed Methane Woodford Bourarhat Jordan China Eagle Ford Haynesville Satis Oman…
  32. March 2010 Strategy Presentation – BP Plc – slide 32
    North America Gas Increase in Well Productivity Noel Tight Gas Woodford Shale Initial Production Rate 60% 20% Pre-BP BP BP 1st 10 wells latest 10 wells Greater Green River Wamsutter Tight Gas San Juan Coal Bed…
  33. March 2010 Strategy Presentation – BP Plc – slide 33
    Managing the worlds giant oilfields Track record in giant oilfield development Prudhoe Bay ACG Samotlor Thunder Horse Rumaila* 66bn bbls oil in place 12bn bbls produced 17bn+ bbls further potential * Resource in place,…
  34. March 2010 Strategy Presentation – BP Plc – slide 34
    TNK-BP update 2009: continued success story Governance and shareholder alignment Safer operations Volume growth Solid financial performance 2010: expected performance Investment 4bn Production growth 1-2% Continued focus on cost…
  35. March 2010 Strategy Presentation – BP Plc – slide 35
    TNK-BP: future growth Core production areas Project areas * 2009 start-ups Yamal Projects Moscow Suzun Tagul Russkoye Nyagan Rospan Kamennoye* Samotlor Uvat* Orenburg Novosibirsk Verkhnechonskoye 36
  36. March 2010 Strategy Presentation – BP Plc – slide 36
    Technology: at the heart of our portfolio Technology Flagships Advanced Seismic Imaging Conventional ISSTM Method Cableless trials Beyond Sand Control Deepwater Efficient Reservoir Access Imaging resource access Field of the…
  37. March 2010 Strategy Presentation – BP Plc – slide 37
    Growth to 2020 Average 1-2% p.a. volume growth to 2015 Increasing potential to sustain growth to 2020 Underpinned by growing resource base and quality through choice Key sources of growth beyond 2015 will come from: Expanding…
  38. March 2010 Strategy Presentation – BP Plc – slide 38
    Efficiency growth: key sources Developing organization Enhancing (creation of Centralized Deepening capital Developments Organization) capability discipline 39
  39. March 2010 Strategy Presentation – BP Plc – slide 39
    Supply chain opportunity Value Contribution Success in capturing deflation in 2009 Category management tor enables sustainable c r improvement Se ade Le Centralized Developments e r Organization accelerates h Ot Cs…
  40. March 2010 Strategy Presentation – BP Plc – slide 40
    Momentum on production costs 12 10 ExxonMobil Chevron Production costs (/boe) Shell 8 ConocoPhillips 6 BP Total 4 2 0 2003 2004 2005 2006 2007 2008 2009 Production costs and production from reserves per annual…
  41. March 2010 Strategy Presentation – BP Plc – slide 41
    Projects efficiency opportunity Project Cost Project spend 20% above Performance sanction estimate over last 5 years 120% 5% 15% Close the gap by: 100% Sanction Supply chain management Estimate to better mitigate inflation and…
  42. March 2010 Strategy Presentation – BP Plc – slide 42
    Drilling efficiency opportunity Drilling performance improved 15% over 2 years Industry Average Global benchmarks 1st / 2nd Opportunity Drilling Capital m quartile in most SPUs Best in Efficiency gains resulted in Basin…
  43. March 2010 Strategy Presentation – BP Plc – slide 43
    Profit growth, cost and capital efficiency Diverse portfolio, underpinned by a growing resource base Strong strategic, operational and cost momentum in 2009 Average 1-2% p.a. volume growth to 2015 Increasing potential to…
  44. March 2010 Strategy Presentation – BP Plc – slide 44
    Iain Conn Chief Executive, Refining & Marketing
  45. March 2010 Strategy Presentation – BP Plc – slide 45
    The Downstream turnaround Safe operations and OMS(1) Behaviours and core processes Restoring missing revenues and earnings momentum Business simplification Repositioning cost efficiency (1) OMS Operating Management…
  46. March 2010 Strategy Presentation – BP Plc – slide 46
    Phase 1 - Competitive gap is closed Underlying ROACE(1) % (post tax) Underlying Net Income /bbl (3) 30 6 25 5 20 4 15 3 10 2 5 1 0 0 2003 2004 2005 2006 2007 2008 2009 2003 2004 2005 2006 2007 2008 2009 Competitor…
  47. March 2010 Strategy Presentation – BP Plc – slide 47
    Performance recovery 20072009 9 ge Ran c e an 8 fo r m er Pre-tax underlying RC profit /bbl lP ica or 7 H ist 6 5bn 2005 2004 5 2006 4 2007 2009 3 2008 2 1 0 0 2 4 6 8 10 BPs Refining Global Indicator…
  48. March 2010 Strategy Presentation – BP Plc – slide 48
    Performance momentum 20072009 BPs Refining Global Indicator Margin (GIM) Pre-tax underlying RC profit bn 2.1 (1.8) (3.3) 3.9 2.7 3.6 3.3 2007 Environment Performance 2008 Environment Performance 2009 Improvement…
  49. March 2010 Strategy Presentation – BP Plc – slide 49
    Our portfolio and performance 20072009 2009 average pre-tax operating Pre-tax underlying RC capital employed bn profit bn Fuels Value Chains 2007 2008 2009 Convenience Fuels Marketing 1.2 2.0 3.1 14 and Supply Refining 1.2 (0.7)…
  50. March 2010 Strategy Presentation – BP Plc – slide 50
    Sources of gap closure 20072009 2007 2008 2009 Repositioning cost efficiency 0.6bn Simplification 1.4bn Restoring revenues & earnings momentum 2.8bn 4.8bn(1) (1) Based on underlying pre-tax RC profit per annum,…
  51. March 2010 Strategy Presentation – BP Plc – slide 51
    /bbl 10 12 0 2 4 6 8 1990 1991 1992 1993 1994 GIM adjusted to 2009 1995 1996 1997 1998 19922003 range 1999 2000 2001 Refining margins 19902009 2002 2003 2004 2005 2006 2007…
  52. March 2010 Strategy Presentation – BP Plc – slide 52
    Phase 2 Winning performance in a challenging environment 10 9 Pre-tax underlying RC profit /bbl 8 7 6 2005 2004 5 2006 4 2007 2009 3 2008 2 1 0 0 2 4 6 8 10 BPs Refining Global Indicator Margin (GIM) /bbl…
  53. March 2010 Strategy Presentation – BP Plc – slide 53
    Performance opportunity: efficiency, quality and integration 2007 2008 2009 2010 2011 2012 Repositioning Repositioning cost efficiency 1.5bn cost efficiency Portfolio quality Simplification 0.5bn & integration Restoring…
  54. March 2010 Strategy Presentation – BP Plc – slide 54
    Repositioning cost efficiency BP R&M cash cost index 140 130 120 110 100 2004 Baseline 90 80 70 60 50 2004 2005 2006 2007 2008 2009 Cash cost index Cash cost index at constant forex and energy Adjusted to exclude…
  55. March 2010 Strategy Presentation – BP Plc – slide 55
    Improving efficiency Refining Refining performance 100 Planning and execution 2012 95 2004 2009 Turnarounds and projects Solomon Availability % 90 85 Contractor management 80 Sourcing 75 2007 70 Energy efficiency…
  56. March 2010 Strategy Presentation – BP Plc – slide 56
    Improving efficiency Other sources Manufacturing efficiency Procurement & Supply Chain Management Business service centres Business process efficiency Overheads and functions Logistics and marketing channels Focused…
  57. March 2010 Strategy Presentation – BP Plc – slide 57
    Fuels Value Chains: quality & integration Right markets, right locations Advantaged refineries and logistics Quality products and brands Marketing and channel management Supply optimisation and trading Common processes and…
  58. March 2010 Strategy Presentation – BP Plc – slide 58
    Global refining quality Average Refinery 20082009 Size (kbd) Utilization % 250 BP Divestments 0009 Alliance Mombasa (1) Coryton Reichstett 200 Grangemouth Salt Lake Lavera Singapore Mandan Yorktown Divested 150…
  59. March 2010 Strategy Presentation – BP Plc – slide 59
    Whiting Refinery Modernization Project Major rebuild of CDU to process heavy crude New world scale 100kbd state of the art 6 drum coker New world scale sulphur removal and gas oil hydrotreating units Refinery infrastructure…
  60. March 2010 Strategy Presentation – BP Plc – slide 60
    Whiting Refinery Modernization Project Sources of value 600 Indexed Pre-tax underlying RC profit /bbl 500 Mid West post project performance for a range of WTI Lloydminster 400 differentials 300 Mid West historical 200…
  61. March 2010 Strategy Presentation – BP Plc – slide 61
    International Businesses: quality and growth Material market shares 40% of capital employed in growth markets Leading technologies Strong customer relationships Premium brands Margin share growth 62
  62. March 2010 Strategy Presentation – BP Plc – slide 62
    Net investment 5 4 3 2 Organic capex 1 Depreciation 0 bn (1) Total net investment (6) (7) 2005* 2006 2007 2008 2009 2010 2010 BP projections * Includes 8.3bn proceeds for Innovene sale 63
  63. March 2010 Strategy Presentation – BP Plc – slide 63
    Safety, efficiency, quality and integration Safe and reliable operations remains 1 Over 2bn p.a. of pre-tax performance opportunity in 23 years Costs: return to below 2004 levels Refining: targeting break-even in similar…
  64. March 2010 Strategy Presentation – BP Plc – slide 64
    Tony Hayward Group Chief Executive
  65. March 2010 Strategy Presentation – BP Plc – slide 65
    Realising the opportunity Exploration and Production Production Average 1-2% p.a. volume growth to 2015 Increasing potential to sustain growth to 2020 Efficiency Projects: improve capital efficiency Drilling: close gap to best…
  66. March 2010 Strategy Presentation – BP Plc – slide 66
    Capex and divestments 20082010 bn 2008 2009 2010 Exploration & Production 15.6 14.7 15 Refining & Marketing 4.7…
  67. March 2010 Strategy Presentation – BP Plc – slide 67
    Strategy Upstream profit growth, cost and capital efficiency Downstream turnaround, cost efficiency Alternative Energy focused and disciplined Corporate efficiency 68
  68. March 2010 Strategy Presentation – BP Plc – slide 68
    Q&A Tony Hayward Byron Grote Group Chief Executive Chief Financial Officer Andy Inglis Iain Conn Chief Executive Chief Executive Exploration & Production Refining & Marketing 69

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