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BG Group: Q1 2011 Results & Strategy

May 2011

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 countries, sectors or markets in which BG Group operates. By their nature, forward-looking statements involve uncertainty because they depend on future circumstances, and relate to events, not all of which are within BG Group's control or can be predicted by BG Group. Although BG Group believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results could differ materially from those set out in the forward-looking statements. A detailed analysis of the factors that may affect our business, financial performance or results of operations is set out in the Principal risks and uncertainties included in BG Group plcs Annual Report and Accounts 2010. No part of these results and Strategy Presentation constitutes, or shall be taken to constitute, an invitation or inducement to invest in BG Group plc or any other entity, and must not be relied upon in any way in connection with any investment decision. BG Group undertakes no obligation to update or revise publicly any forward-looking statements. Please note that this presentation represents only a summary of BG Groups First Quarter Results for the financial quarter ended 31 March 2011 and of its Full Year Results for the financial year ended 31 December 2010 and 2011 Strategy Presentation released on 8 February 2011 (the Results). It does not contain sufficient information to enable as full an understanding as would be provided by full versions of the Results and relevant accompanying speeches. This presentation should therefore be read in conjunction with those additional documents available from BG Groups website, www.bg-group.com

Q1 results

Q1 2011 key points Challenging quarter for E&P operations Higher UK North Sea tax reduces earnings by $265m 2011 LNG operating profit expected towards upper end of $1.9-2.2 billion Significant progress on long-term growth programme Positive appraisal results on the Guar and Iara discoveries LNG supply contracts signed with Tokyo Gas & Chubu Electric Third exploration success offshore Tanzania

Major projects on track

Q1 results

Q1 2011 results
Q1 2011 Q1 2010 % yoy

Total operating profit ($m)

1 965

1 955

+1%

Earnings ($m)

819

1 097

-25%

EPS (cents)

24.2

32.5

-26%

Continuing operations excluding disposals, certain re-measurements and impairments

Higher UK tax impacts earnings

Q1 results

Q1 2011 total operating profit


Q1 2011 $ million Q1 2010 $ million % yoy

E&P LNG T&D Other activities Group total

1 258 570 145 -8 1 965

1 192 633 140 -10 1 955

+6% -10% +4% -20% +1%

Continuing operations excluding disposals, certain re-measurements and impairments

Q1 results

LNG
BG Group total LNG operating profit ($ million)
3000
Actual Plan

$1.9 to $2.2 bn
2000

1000

0 2008 2009 2010 2011 2012


Continuing operations excluding disposals, certain re-measurements and impairments Future profits at 2011 reference conditions (see Appendix) As at 8 February 2011

Expect 2011 to be towards upper end of guidance

Q1 results

Q1 2011 results
Q1 2011

Cash generated by operations ($m)

1 799

Capex ($m)

2 296

Net debt ($m)

8 510

Gearing (%)

23%

Investment in growth, soundly financed

Q1 results

Capital investment & balance sheet 2011-2012


$10.0 bn in 2011 $11.0 bn in 2012 Brazil, Australia, US and UK focus

Soundly financed
Full access to relevant capital markets 9 year average net debt maturity $ 3.5 bn committed lines Strong and growing operating cash flow

Dividend policy in line with long-term earnings growth


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Market background

Market background

World GDP outlook


Real GDP growth (annual % change)
12% 2000-08 2010-20 10%

8%

6%

4%

2%

0% US
Source: Oxford Economics

Japan

EU

China

India

World

High growth in Emerging Markets drives higher World growth

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Market background

Contribution to world energy demand


Country contribution to net global demand increase (% of total)
USA 2000-08 2010-20

Japan

EU

India

China

-10%

0%

10%

20%

30%

40%

50%

60%

Source: Wood Mackenzie Energy Markets Service

China and India drove energy demand growth over the last decade

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Market background

Significant upside for emerging market gas demand


Gas consumption vs GDP/head
45% 40% 35% 30% 25% 20%
Japan US Gas share of energy consumption UK

15% 10% 5% 0% 1000


Source: IMF; EIA; BG Group forecasts 2010 2000

2020 India China

10000
GDP/Head (1995 international $) log scale

History suggests China & India have potential for much higher gas usage

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Market background

Gas penetration
China is a key market
Gas < 4% of energy mix in 2009 Thermal Coal

1% gas increase in China energy mix


Around 25 bcma increase in demand Equivalent to 4 QCLNG trains

China gas penetration to India levels


ca 150 bcma increase in demand Equivalent to ca 100 mtpa of LNG

Chinese and Indian gas demand in 2020 (as shown on preceding slide) assumes gas penetration of 8% & 16% respectively

Significant upside from higher gas penetration in China

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Market background

Drivers of gas growth


Incremental gas demand (bcma)
1000

Past demand growth


Driven by coal substitution in power Mainly in developed economies

Mostly oil substitution

Future demand growth


Driven by oil substitution In emerging economies

500

Some coal substitution

Mainly industrial, commercial & residential

0 2000-2010
Power Industrial Source: BG Group

Underpins gas as a premium fuel


2010-2020
Other Residential & Commercial

Gas increasingly competing with oil

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Market background

Gas demand outlook


World gas demand (bcma)
5000
CAGR 2010-2020

4000

China Asia (excluding China)

10.3% 3.4% 5.4% 3.8% 2.0% 0.8% 1.5% TOTAL 2.9%

3000

Middle East & Africa South America

2000
Russia and Central Asia

1000

Europe North America

0 2000

2005

2010

2015

2020

Source: BG Group, Wood Mackenzie and IEA

Strong growth in world-wide gas demand

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Market background

Global supply
Global gas supply 2010-2020 (bcma)
5000 CAGR 9.0% CAGR 2.9% 4000
3,087
LNG M East C Asia Russia Decline Other

4,108

3000

> 75% of current supply

2000

N America

1000

0 2010
Source: BG Group, Wood Mackenzie and EEGA

2020

New supplies required more than 75% of current supply

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Market background

LNG supply & demand (2020)


LNG supply & demand in 2020 (mtpa)
500
Unmet demand Forecast 2020 trade* 70 mtpa supply challenge Planned**

400

Supply tightness

300

200

100

2010 trade

Supply

Demand

Source: Waterborne Energy (2010 trade), BG Group estimates, public data, various consultant f orecasts *Average consensus of Wood Mackenzie, IHS CERA and Poten & Partners ** Planned projects post FID with start-up bef ore end 2014

Supply tightness

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Market background

Key messages Strong growth in global demand for energy through decade Low gas share of total energy consumption in emerging economies Both economic development and fuel substitution drive growth Global LNG to grow sharply; constrained by supply not demand BG well positioned to take advantage of these opportunities Increasing exposure to oil prices

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Portfolio for growth

Portfolio for growth

Clear, effective and resilient strategy

Global Gas Major Connect gas to high-value markets


Build & access markets Serve customers

Secure competitively priced resources


Equity reserves Contracted resources

Skills to succeed across the gas chain

Strategy delivering value

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Portfolio for growth

Prospect inventory of resources


Other Brazil UK Thailand Tanzania Egypt Norway China USA Australia

Net risked resources of 3.7 bn boe


CAGR 12% 2000-2010 > 200 prospects & leads 85% gas related > 60% in established production assets > 70% in investment grade countries

Non-operated

Total gross unrisked resources 47 bn boe


Operated

BG net unrisked resources of 19 bn boe

Operate over 70% of inventory


As at 8 February 2011

Diverse and balanced portfolio

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Portfolio for growth

Proved reserves replacement 2010


BG Groups reserves replacement
3 year total proved RRR 223%

3 year reserves replacement

1 year total proved RRR

224%

BG 2008-2010 (1) BG 2008-2010 (2) Peer 2007-2009 3 year organic proved RRR 190%
(1) BG 2008-10 position with Underlying Perf ormance data

1 year organic proved RRR

229%

(2) BG 2008-10 position with SEC Data

0%

100%

200%

300%

-100%

0%

100%

200%

300%

Source: Evaluate Energy 2010 BG Group Peer Group includes Super Majors, and US and European Integrated Majors

Strong RRR performance and outlook

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Portfolio for growth

Reserves & resources


Total reserves & resources (mmboe)
CAGR 19%
18000 16,180 14,494 13,126 12000 10,046 8,017 2,713 3,122 1,772 1,383 2,149 0 2006
SEC Proved Reserves

Total reserves & resources/ production* 69 years

3,707 3,433

3,562 4,931 3,722 5,757 53 years

3,356

6000

3,383 1,529 2,039 2007 2,459 2008

3,530

3,823

28 years

2,600 2009
Discovered Resources**

2,893 2010
Risked Exploration

12 years

Probable Reserves**

Total Reserves/Resources as at year end *Based on 2010 production of 235.7 mmboe and cumulative total reserves/resources **Adopted SEC definition for Probable reserves in 2009; Discovered resources called Unbooked resources until 2009

Strong growth in total reserves & resources

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Portfolio for growth

Key projects
1800

1200
Projects 2011-2013 Projects 2014-2016 Projects 2017-2020

600

Bolivian projects KGK train 4 Bongkot South Lula FPSO 2 Gaupe UKU projects Guar FPSO 1 WDDM Ph VIIIb Jasmine

Brazil FPSOs Jordbr Block 5c KGK further trains Bream KGK projects/wells Brazil FPSOs WDDM wells Cernambi Margarita II Risked Exploration FPSO 1 QCLNG Guar FPSO 2 Starfish HBH UKU projects Jackdaw WDDM projects/wells

Ongoing QGC, Haynesville and Marcellus development

0 2010
As at 8 February 2011

2020

Firm projects underpinning growth plans

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Portfolio for growth

Australia: 2010 progress


Curtis Island

QCLNG plant

QCLNG sanctioned October 2010


Two trains: 8.5 mtpa Construction underway

Gladstone Existing pipeline

QCLNG proposed pipeline

BGs 7th & 8th LNG trains in 12 years

$15 billion investment Around 10 mtpa of customer agreements

Roma

Wallumbilla

Over 2,000 wells by 2014


Chinchilla Condamine Dalby

> 6,000 wells over life of project

540 km pipeline network


Toowoomba
QGC interests

Moonie

Project building momentum

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Portfolio for growth

Australia: Production and options for expansion


BG Group net production* (000s boepd)
250
Partner/Other gas supplying QCLNG

Net plateau production ca 210 kboepd* Expansion potential beyond two trains Resources expanded and matured

200
Net BG Group

150

Gross resources increased to 21 tcf Gross 2P reserves increased to 8 tcf

100

Midstream infrastructure
Scaled to support three trains Permitted for three trains, space for five

50

0 2010

2015

2020

Train 3
Enhanced economics potential

Future production volumes at 2011 ref erence conditions (see Appendix) *BG Group net production is post CNOOC f arm-out (5%) and pre Tokyo Gas f arm-out (1.25%)

Rapid and material value creation

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Portfolio for growth

US E&P: Shale gas cost of supply


Cost of supply ($/mmbtu)
Barnett other Other CBM Woodford Tight gas Barnett non core Marcellus other Haynesville other CBM core Marcellus core Barnett core Haynesville core Granite Wash 0
As at 8 February 2011

10

Source: BG Group interpretation of ARI and IHS CERA data

BG Group has low cost, high quality resource base

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Portfolio for growth

US E&P: Haynesville core economics


Typical well (bcf/year)
3

Average well recovery: 9 bcf BG net wells: 275 (2011-15) Average well cost $9m ($1.0/mmbtu)

Operating cost: $1.4/mmbtu Unit technical cost: $2.4/mmbtu

Economic breakeven $3.2/mmbtu 22 rigs operating during Q1 2011 20 mmcfd avg IP rate (Haynesville core)

0
Year 1 Year 2 Year 3 Year 4 Year 5 Years Years 6 to 10 11 to 25 (Avg) (Avg)

BG net wells ca 675 (2011-20)

Robust economics

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Portfolio for growth

US E&P: Production
Rapidly expanding & capital efficient
BG total resources 8.5 tcf

Leveraging marketing capabilities Benefit from supply restructuring Highest quality areas in Haynesville
Core c.80% of production in next 5 years

Marcellus core area economics


Potentially similar to Haynesville core

190 kboepd sustainable to 2020

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Portfolio for growth

Brazil: Key developments in 2010


Lula, Cernambi, Guar resources upgrade Low unit technical costs for first 3 FPSOs Start-up of first permanent Lula FPSO Thirteen FPSOs
1 on stream 10 committed & 2 being tendered

Plans de-risked, enhanced visibility $13 bn gross capex commitments in 2010 Excellent operator & JV collaboration

Significant progress and visibility

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Portfolio for growth

Brazil: First three contracted FPSOs


Average recovery: 750 mmboe/module
Processing & gathering terminal Existing gas pipeline 145 km Mexilho Rio de Janeiro

Doubling original estimates

Capex*: $5/boe Opex*: $9/boe Sweet crude Brent parity prices


Gas pipeline 216 km BM-S-11 BG 25% Cernambi BM-S-9 BG 30% Guar

$4/bbl transportation costs

Lula

Constructed To be constructed As per evaluation and development plan submitted to ANP

50 km

*See definitions in Appendix

Robust economics

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Portfolio for growth

Brazil: Gross FPSO capacity

Programme for 2.3 mmboepd capacity by 2017

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Portfolio for growth

Brazil: Production
BG Group net production (000s boepd)
600

Net production >550 kboepd by 2020* Lula and Cernambi potential upside
Enhanced recovery techniques

450

Infill drilling

Guar Norte production potential of


300

50 kbopd

Iara Horst appraisal well successful


150

Carioca EWT in 2011 Material gas resources, gross >14tcf


New Lula-Mexilho pipeline installed
2015 2020
*BG Group plan

0 2010
Future production volumes at 2011 ref erence conditions (see Appendix)

Excellent progress in Brazil

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Portfolio for growth

LNG supply growth options


BG Group total LNG contracted volumes (mtpa)
30 ca +50%

20 ca +50%

10

0 2010
QCLNG T3
Future volumes at 2011 ref erence conditions (see Appendix)

2015
New supply potential

2020

Strong supply growth

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Portfolio for growth

Long-term production volumes


BG Group net production (000s boepd)
1800 Risked Exploration 1500 Other
8% 6% 1.6 million boepd

1200

1.2 million boepd

900 600

US Australia

300 Brazil 0 2010 2010


As at 8 February 2011

2015 2015

2020 2020

Future production volumes at 2011 ref erence conditions (see Appendix)

Delivering 7% growth from discovered resources

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Key messages E&P: upper end 6-8% to 2020, 7% from existing discoveries; LNG: 20 mtpa by 2015; potential 30 mtpa by 2020 Brazil: > 550 kboepd by 2020 QCLNG: construction underway EXCO JV: 190 kboepd by 2015 LNG 2011: upper limit of $1.9-2.2 billion Total reserves & resources: up 1.7 bn boe

Progress and delivery

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BG Group: Q1 2011 Results & Strategy


May 2011

Appendix

Key assumptions
REFERENCE CONDITIONS

Brent Oil price US $70/bbl US Henry Hub $5.5/mmbtu US/UK exchange rates of $1.5:1 US/AUD exchange rates of $1:$A1.2 Prepared under International Financial Reporting Standards All production includes fuel gas

PRINCIPAL RISKS AND UNCERTAINTIES

Asset integrity, safety, health and security Capital requirements, liquidity and interest rates Climate change Commodity prices Credit Delivery of projects Environment

Exchange rates Insurance Operational performance Organisational capacity Political context and stakeholder relationships Regulation and legislation Resources discovery, estimation and development

For a detailed discussion of these and other risk factors, please refer to the Principal risks and uncertainties included in BG Groups Annual Report and Accounts 2010. Actual performance could differ materially from that shown. Accordingly, no assurances can be given that such performance will be achieved.

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