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BP STRATEGY PRESENTATION – BP Plc

BP Plc · Feb 27, 2008 · 79 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. BP STRATEGY PRESENTATION – BP Plc – slide 1
    BP Strategy Presentation 27 February 2008
  2. BP STRATEGY PRESENTATION – BP Plc – slide 2
    Tony Hayward Group Chief Executive Safety People Performance
  3. BP STRATEGY PRESENTATION – BP Plc – slide 3
    Agenda Closing the competitive gap Tony Hayward Exploration & Production Andy Inglis TNK-BP Bob Dudley Refining & Marketing Iain Conn Alternative Energy Vivienne Cox Financial Framework Byron Grote Conclusions Tony Hayward
  4. BP STRATEGY PRESENTATION – BP Plc – slide 4
    Oil prices: a more positive outlook 100 80 60 /bbl 40 20 0 1975 1979 1983 1987 1991 1995 1999 2003 2007 Nominal Brent price Real Brent price Source: Platts, BP February 2008 prices; US CPI discounted
  5. BP STRATEGY PRESENTATION – BP Plc – slide 5
    US gas prices: disconnected from oil price WTI, Henry Hub and US Residual Prices 100 17.2 WTI 80 Henry Hub 13.8 (right scale) 60 10.3 /mmbtu /boe 40 6.9 20 Residual LSFO 1% Futures 3.4 (USGC) 0 0.0 Jan-06…
  6. BP STRATEGY PRESENTATION – BP Plc – slide 6
    Industry challenges Challenges Sector inflation Rising government take Competition for new access BPs response Increased investment in: Exploration Access Technology Focus on: Reciprocity Costs Developing low-carbon options
  7. BP STRATEGY PRESENTATION – BP Plc – slide 7
    Refining margins Global Indicator Margins 9.94 10 8.56 8.49 8 6.38 6 /bbl 4.50 4.50 4.11 4 2.30 2 0 2000 2001 2002 2003 2004 2005 2006 2007 Source: Platts, BP
  8. BP STRATEGY PRESENTATION – BP Plc – slide 8
    Closing the competitive gap Safe and reliable operations People: building capability Performance: Restoring momentum Reducing complexity Technology: increased focus Securing the future
  9. BP STRATEGY PRESENTATION – BP Plc – slide 9
    Closing the competitive gap Safe and reliable operations Recordable Injury Frequency Integrity Management incidents 2.5 80 70 2.0 60 1.5 50 40 1.0 Industry range* 30 20 0.5 10 0 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2004…
  10. BP STRATEGY PRESENTATION – BP Plc – slide 10
    Closing the competitive gap People: building capability Operations Major Projects Common Process Operations Academy Operating Management System Selective recruitment Building technical and functional expertise 2,000 additional…
  11. BP STRATEGY PRESENTATION – BP Plc – slide 11
    Closing the competitive gap Performance: restoring momentum Momentum building in 2008 Project start-ups Restoring refining availability
  12. BP STRATEGY PRESENTATION – BP Plc – slide 12
    Closing the competitive gap Performance: reducing complexity Organizational simplification Three segments to two Separate Alternative Energy business Delayering Reducing corporate overheads by 15-20% Fewer layers of management…
  13. BP STRATEGY PRESENTATION – BP Plc – slide 13
    Closing the competitive gap Technology: increased focus Building leadership positions Implementation at scale Long-term commitment to research Sustained increase in technology investment 2.9bn over the last three years 1.1bn in…
  14. BP STRATEGY PRESENTATION – BP Plc – slide 14
    Closing the competitive gap Securing the future Exploration & Production New resource access and continued exploration success Net resource additions of 1 billion boe in 2007 14th consecutive year of reporting 100% reserves…
  15. BP STRATEGY PRESENTATION – BP Plc – slide 15
    Andy Inglis Chief Executive, Exploration & Production
  16. BP STRATEGY PRESENTATION – BP Plc – slide 16
    Exploration and access success continues TNK-BP Canadian oil sands Sakhalin North America Gas Azerbaijan Algeria Egypt GoM Libya Pakistan Oman Colombia Angola Onshore core Australia Offshore core PAE Offshore test…
  17. BP STRATEGY PRESENTATION – BP Plc – slide 17
    Access: Canadian oil sands Regional oil sands leases M cClelland Lake Expected to be sanctioned in Athabasca Partnership River development 2008 area Joint investment to 2012 Fort McKay estimated at around 3 billion First…
  18. BP STRATEGY PRESENTATION – BP Plc – slide 18
    Resources and reserves growing Non-proved Proved Conventional oil Deepwater oil Water flood viscous 17.8 bn boe and heavy oil* 42.1 bn boe Conventional gas LNG gas* Tight gas* 13 years Coal bed methane* 30 years *…
  19. BP STRATEGY PRESENTATION – BP Plc – slide 19
    Incumbent resource positions Coal bed methane 0 2 bn boe Light, condensate and volatile oil 2 10 bn boe Heavy / viscous oil Tight gas 10 bn boe Wet gas Total resources = proved and non-proved Dry gas
  20. BP STRATEGY PRESENTATION – BP Plc – slide 20
    Technology focus areas Converting resources to reserves Each has potential to deliver 1bn boe increase in reserves 1. North America Unconventional Gas Prove 12 tcf tight gas resources via fracture sweet spot identification and technical…
  21. BP STRATEGY PRESENTATION – BP Plc – slide 21
    Growing production: 20082012 2008 Growth versus 2007 2009 Above 4.0 mmboed* 2012 Around 4.3 mmboed* * Projections based on current portfolio at 60/bbl
  22. BP STRATEGY PRESENTATION – BP Plc – slide 22
    Potential PSC impacts versus 60/bbl Incremental impact on 2008-2015 of 100/bbl vs. 60/bbl 2008 2009 2010 2011 2012 2013 2014 2015 0 mboed (100) (200) BP projections based on current portfolio
  23. BP STRATEGY PRESENTATION – BP Plc – slide 23
    Key project start-ups 2007 2008 2009 2010-12 Rosa 9 Kizomba C Ph1 9 Atlantis North Flank Angola LNG Block 31NE (PSVM) Greater Plutonio 9 Saqqara Canada Noel Great White Kizomba A Ph2 Egypt Gas Ph 1 Dorado (Marimba North) 9 ACG…
  24. BP STRATEGY PRESENTATION – BP Plc – slide 24
    Securing the future Our current resource base is capable of sustaining production above 4mmboed to 2020* Without assuming any future exploration success Without assuming any new access An increasing proportion of projects are…
  25. BP STRATEGY PRESENTATION – BP Plc – slide 25
    Sustaining production through 2020 Conventional oil Foinaven P2S Conventional oil NWAD Saqqara Clair Ridge Valhall Redevelopment Deepwater gas Conventional gas Egypt Gas SNS Compression Conventional oil/gas Harding Area Gas ACG Phase 3…
  26. BP STRATEGY PRESENTATION – BP Plc – slide 26
    Alaska Our assets 2007 Production and Capex BP leases Map location Beaufort Sea 500 3,000 Production Discovery / Alaska development 400 2,500 Milne Point Northstar 2,000 mboed Point 300 m McIntyre 1,500 Niakuk…
  27. BP STRATEGY PRESENTATION – BP Plc – slide 27
    North America Gas Our assets 2007 Production and Capex Production 500 3,000 Discovery / development 400 2,500 Canada 2,000 Canada CBM mboed 300 m 1,500 Jonah Over Thrust Wamsutter 200 Moxa 1,000 San Juan North…
  28. BP STRATEGY PRESENTATION – BP Plc – slide 28
    North Sea Our assets 2007 Production and Capex Shetlands Hub 500 3,000 Sullom Voe 400 2,500 Terminal Deep 2,000 Water mboed Northern 300 Hub m Hub Stavanger 1,500 200 Norway 1,000 Aberdeen Hub 100 500 Central…
  29. BP STRATEGY PRESENTATION – BP Plc – slide 29
    Gulf of Mexico Our assets 2007 Production and Capex 0 km 100 500 3,000 New Orleans Houston 400 2,500 2,000 mboed 300 m 1,500 200 1,000 100 500 BP leases Production 0 0 Discovery / Production Capex development…
  30. BP STRATEGY PRESENTATION – BP Plc – slide 30
    Trinidad & Tobago Our assets 2007 Production and Capex BP leases Caribbean BP leases deep rights 500 3,000 Sea Production Port of Spain Discovery / development 400 2,500 Midstream assets Trinidad 2,000 mboed 300 m…
  31. BP STRATEGY PRESENTATION – BP Plc – slide 31
    Angola Our assets 2007 Production and Capex 0 100 Cabinda Dem. Rep. km of Congo 500 3,000 Block Angola LNG 400 2,500 15 2,000 Block mboed 300 m 31 Block 17 1,500 Angola 200 1,000 100 BP leases 500 Production 0 0…
  32. BP STRATEGY PRESENTATION – BP Plc – slide 32
    Azerbaijan Our assets 2007 Production and Capex 500 3,000 0 300 Russia Kazakhstan km 400 2,500 Black Sea Caspian Sea 2,000 mboed Georgia WREP 300 m Supsa Tbilisi Pipeline Sangachal 1,500 Terminal Turkmenistan 200 BTC…
  33. BP STRATEGY PRESENTATION – BP Plc – slide 33
    Egypt Our assets 2007 Production and Capex 0 100 ProductionDiscovery Production Discovery / / km BP leases Development 500 3,000 BP leases development 400 2,500 2,000 mboed 300 m 1,500 200 1,000 Gulf of 100 500…
  34. BP STRATEGY PRESENTATION – BP Plc – slide 34
    LNG growth BP equity gas into LNG plant BP liquefaction plant output 3,500 18 16 3,000 14 2,500 12 2,000 mmcf/d mmtpa 10 1,500 8 6 1,000 4 500 2 0 0 2012 2013 2006 2007 2008 2014 2015…
  35. BP STRATEGY PRESENTATION – BP Plc – slide 35
    BP LNG portfolio Isle of Grain Bilbao Cove Point Elba Island Egypt Guangdong ADGAS Trinidad & Tobago Bontang Tangguh Ph 1 Angola Tangguh Ph 2 Browse NWS T 5 IoJansz NWS T 1-4 Operating LNG project Sanctioned LNG…
  36. BP STRATEGY PRESENTATION – BP Plc – slide 36
    Growing investment 20062008 18 16 14 12 Organic capex Pan American Energy 10 bn 8 TNK-BP 6 4 BP 2 0 2006 2007 2008 Organic capex above excludes Rosneft in 2006, swaps with Occidental in 2007 and accounting…
  37. BP STRATEGY PRESENTATION – BP Plc – slide 37
    A sustainable future Continued success in focused exploration and access strategy Resource base continues to grow: increasing by 1 billion boe in 2007 14 year track record of reporting 100%+ reserves replacement* Sustainable…
  38. BP STRATEGY PRESENTATION – BP Plc – slide 38
    Bob Dudley President and CEO TNK-BP
  39. BP STRATEGY PRESENTATION – BP Plc – slide 39
    TNK-BP Bolshekhetskiy Russkoye Van Yogan PK1/2 Kammenoye Talinskoye Core production areas Project areas Refinery assets
  40. BP STRATEGY PRESENTATION – BP Plc – slide 40
    Delivery on promises The four promises made in February 2003: Production growth 6.5% per annum since 2003 Technology transfer 3D Seismic, Samotlor and waterflood Corporate governance Minority shareholder, internal processes and…
  41. BP STRATEGY PRESENTATION – BP Plc – slide 41
    Environmental challenges and responses Challenges Responses Production growth Technology / operating practices State companies Co-operation / partnering Organizational capability Training and innovation Levels of compliance…
  42. BP STRATEGY PRESENTATION – BP Plc – slide 42
    Samotlor 4-Way closures Status and plans Discovered Current Status Planned 2008 100% discovery success (7 for 7) 3D Future 60mmboe reserves 2008 30mboed current production 3D 2009 2008+ Plans Four new closures (24 wells) 4,000…
  43. BP STRATEGY PRESENTATION – BP Plc – slide 43
    TNK-BP recovery factors Top five fields have 55% of proven reserves OOIP(1) Recovery factors Up to 2004 TP(2) 2007 TP(2) Top five TNK-BP fields bn boe end 2007 PRMS(3) PRMS(3) Samotlor (South) 45.3 38% 42% 44% Samotlor (North)…
  44. BP STRATEGY PRESENTATION – BP Plc – slide 44
    Technology: Russkoye Pilot 4 Pilot 1 Pilot 3 Pilot 2 Hot water Injection Wire Estimated resources 2bnboe wrap Screen+ gravel pack Piloting alternative technologies with Cold water Steam Injection Injection…
  45. BP STRATEGY PRESENTATION – BP Plc – slide 45
    TNK-BP: an integrated company Project Areas Core Production Refineries Marketing Gas Uvat Samotlor Ryazan Moscow SIBUR JV Verkhnechonskoye Nyagan Saratov Ukraine Rospan Rospan Orenburg Lisichansk St. Petersburg Niz GRES3…
  46. BP STRATEGY PRESENTATION – BP Plc – slide 46
    TNK-BP production and capex 2003-2008 2.5 5 2.0 4 Production (mboed) Capex (bn) 1.5 3 1.0 2 0.5 1 0.0 0 2003 2004 2005 2006 2007 2008 Capex excluding acquisitions Production Divested production TNK-BP…
  47. BP STRATEGY PRESENTATION – BP Plc – slide 47
    TNK-BP Projects Gas Conventional oil / gas Rospan Bolshekhetskiy Conventional oil / gas Heavy / viscous oil Kammenoye Russkoye Heavy / viscous oil Van Yogan PK1/2 Conventional oil / gas Talinskoye Conventional oil / gas…
  48. BP STRATEGY PRESENTATION – BP Plc – slide 48
    TNK-BP in Russia Greater integration and engagement key for long-term success TNK-BP a venture between BP and Russia Technology / operations Participant in global markets Russia will continue to provide ample opportunities
  49. BP STRATEGY PRESENTATION – BP Plc – slide 49
    Iain Conn Chief Executive, Refining & Marketing
  50. BP STRATEGY PRESENTATION – BP Plc – slide 50
    Closing the performance gap Performance versus competitors Closing the performance gap Portfolio and future prospects
  51. BP STRATEGY PRESENTATION – BP Plc – slide 51
    Competitive performance Underlying ROACE(1) (post-tax) % 30 25 20 Competitor average(2) % 15 Competitor range(2) 10 BP R&M 5 0 2003 2004 2005 2006 2007 (1) BP and Competitor data adjusted to comparable basis (2)…
  52. BP STRATEGY PRESENTATION – BP Plc – slide 52
    Performance gap at 7.50/bbl refining margin(1) Pre-tax earnings Portfolio / Mix Performance 3.5-4.0 bn RCP pre-tax (1) BP Global Indicator Margin (GIM)
  53. BP STRATEGY PRESENTATION – BP Plc – slide 53
    Our portfolio 2007 2007 Av. pre-tax Pre-tax operating underlying RC capital empl. profit (bn) (bn) Fuels Marketing and Supply Convenience 19 1.2 Fuels Value Chains Refining 16 1.2 Lubricants International 10 1.5…
  54. BP STRATEGY PRESENTATION – BP Plc – slide 54
    Closing the performance gap 1. Safety and operations 2. Fundamental shift in behaviours 3. Restoring missing revenues and earnings momentum Texas City, Whiting; improved refining availability 4. Business simplification…
  55. BP STRATEGY PRESENTATION – BP Plc – slide 55
    Closing the performance gap Sources and phasing Repositioning cost efficiency Business services and overheads Simplification Fuels Value Chains, marketing operations Portfolio consolidation and focus of footprint Restoring…
  56. BP STRATEGY PRESENTATION – BP Plc – slide 56
    Restoring missing revenues Refining availability Solomon availability Lost opportunity (historical and expected) 7.50/bbl refining margin(1) 100 3.0 90 2.0 80 Pre-tax RCP bn % 70 1.0 60 50 0.0 2004 2005…
  57. BP STRATEGY PRESENTATION – BP Plc – slide 57
    Business simplification Fuels value chains US Mid West Rhine Texas City Iberia US West Coast Southern Africa KEY (including East Integrated refiner marketer (IRM) FVCs Africa) ANZ BP refinery JV refinery
  58. BP STRATEGY PRESENTATION – BP Plc – slide 58
    Business simplification Marketing participation strategy Retail channel strategy US convenience: de-capitalize and move to franchise offer Rest of World: hurdle rate returns Focused marketing footprint Lubricants: reducing direct…
  59. BP STRATEGY PRESENTATION – BP Plc – slide 59
    Repositioning our cost efficiency Fewer performance units Consolidate and standardize business service provision Reduce overheads Minimize central activity Fewer layers Third-party spend Leverage procurement
  60. BP STRATEGY PRESENTATION – BP Plc – slide 60
    Future prospects Bias to manufacturing Organic capital expenditure (bn) 6.0 5.0 Other 4.0 Global fuels and lubricants 3.0 Fuels marketing supply and convenience 2.0 Petrochemicals 1.0 Refining 0.0 2004 2008 2008 BP…
  61. BP STRATEGY PRESENTATION – BP Plc – slide 61
    Future prospects Upgrading and expanding in manufacturing United States Europe upgrading and Asia accessing growth expansion markets Northern tier refineries to Canadian heavy oil Rotterdam reconfiguration PTA expansion: Zhuhai…
  62. BP STRATEGY PRESENTATION – BP Plc – slide 62
    What to expect By end 2011, we aim to: Close the performance gap Deliver material free cash flow Actions underway: Restoring missing revenues Business simplification Repositioning our cost efficiency Shifts in emphasis:…
  63. BP STRATEGY PRESENTATION – BP Plc – slide 63
    Vivienne Cox Executive Vice President, Alternative Energy
  64. BP STRATEGY PRESENTATION – BP Plc – slide 64
    Alternative Energy: objective Developing material growth options for BP in low-carbon technologies Building a portfolio of operating businesses and ventures Three stages of development Growing: Wind, solar and gas-fired power…
  65. BP STRATEGY PRESENTATION – BP Plc – slide 65
    Alternative Energy: the market today Demand growth p.a. since 2001 Global new investment in clean energy 40 125 117.2bn 100 86.5bn 30 % 35 wth r o G 75 54.6bn bn 20 % % 58 wth 50 r o G 28.6bn % 10 91 wth 25…
  66. BP STRATEGY PRESENTATION – BP Plc – slide 66
    Alternative Energy: future market drivers Global new investment in Demand growth p.a. 2005-2030E Clean Tech forecast 25 300 20 300bn p.a. required to meet government targets 200 15 bn % % 10 20 wth 100 o Gr 5 0…
  67. BP STRATEGY PRESENTATION – BP Plc – slide 67
    Alternative Energy: solar market BP Solar Sales Global Solar Sales 800 4,000 th gr ow th tor p.a. row .a. S ec 21 % G Solar Sales (MW) Solar Sales (MW) 600 3,000 BP 0% p 6 400 2,000 200 1,000 0 0 2006 2008 2010…
  68. BP STRATEGY PRESENTATION – BP Plc – slide 68
    Alternative Energy: wind market North America wind installed BP wind installed capacity (gross) capacity (gross) 4 60 50 th 3 o w .a. gr p Installed GW Installed GW P B 80% 40 2 30 20 1 10 0 0 2006 2008 2010…
  69. BP STRATEGY PRESENTATION – BP Plc – slide 69
    Alternative Energy: equity valuation Solar multiples based on 7 pure play peers EV / MW Production BP Solar Production Solar 20-30 130 MW valuation X 2.1 3.9bn EV / Revenue BP Solar Revenue 3-5 700m Wind multiples based on…
  70. BP STRATEGY PRESENTATION – BP Plc – slide 70
    Alternative Energy: forward priorities BPs investment in Alternative Energy since launch is 1.5bn and planned investment for 2008 is 1.5bn Wind Install 3GW gross capacity by end 2010 Solar Manufacturing expansion and 800MW sales in…
  71. BP STRATEGY PRESENTATION – BP Plc – slide 71
    Byron Grote Chief Financial Officer
  72. BP STRATEGY PRESENTATION – BP Plc – slide 72
    Organization simplification Re-segmentation and 2008 reporting change Two operating segments: Exploration & Production, Refining & Marketing Gas, Power & Renewables segment eliminated NGLs, LNG, gas & power marketing and trading…
  73. BP STRATEGY PRESENTATION – BP Plc – slide 73
    Investment guidance bn 2006 2007 2008 Exploration & Production 12.2 13.7 15.0 Refining & Marketing 3.1 4.4 5.0 Other (including Alternative Energy) 0.6 1.1 1.5 Organic capital expenditure 15.9 19.2 21-22 Divestments 6.3 4.3…
  74. BP STRATEGY PRESENTATION – BP Plc – slide 74
    Financial Framework: 2001-2007 25 20 2001-2007 total shareholder 15 distribution of 91bn bn 10 5 12% CAGR in dividend over 0 period 2001-2007 (5) 2001 2002 2003 2004 2005 2006 2007 46bn share buybacks, Share issues…
  75. BP STRATEGY PRESENTATION – BP Plc – slide 75
    Financial Framework Changed context Confidence in stronger trading environment Revenue restoration on track Reduced shares outstanding by 16% since the end of 2000 Response Increased capex to support growth Target gearing…
  76. BP STRATEGY PRESENTATION – BP Plc – slide 76
    Balancing sources and uses of cash SOURCES USES Organic Organic capex capex Operating Operating cash cash Dividends Dividends Divestments Divestments Cash acquisitions Cash acquisitions Increase Increase 20-30% Red…
  77. BP STRATEGY PRESENTATION – BP Plc – slide 77
    Tony Hayward Group Chief Executive Safety People Performance
  78. BP STRATEGY PRESENTATION – BP Plc – slide 78
    Conclusions Strategy evolving Long-term planning assumption 60/bbl Closing the competitive gap: Safety : People : Performance Securing the future Exploration & Production: sustainable long term Refining & Marketing: closing…
  79. BP STRATEGY PRESENTATION – BP Plc – slide 79
    Questions & answers

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