E&P Business Trend CSFB Oil & Gas Conference

Transcription

1 E&P Business Trend CSFB Oil & Gas Conference A. Belotti Senior Vice President E&P Business Planning London, June 8 th, 2005

2 Disclaimer This presentation contains forward-looking statements regarding future events and the future results of Eni that are based on current expectations, estimates, forecasts, and projections about the industries in which Eni operates and the beliefs and assumptions of the management of Eni. In particular, among other statements, certain statements with regard to management objectives, trends in results of operations, margins, costs, return on equity, risk management and competition are forward-looking in nature. Words such as expects, anticipates, targets, goals, projects, intends, plans, believes, seeks, estimates, variations of such words, and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict because they relate to events and depend on circumstances that will occur in the future. Therefore, Eni s actual results may differ materially and adversely from those expressed or implied in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, economic conditions globally, the impact of competition, political and economic developments in the countries in which Eni operates, regulatory developments in Italy and internationally and changes in oil prices and in the margins for Eni products. Any forward-looking statements made by or on behalf of Eni speak only as of the date they are made. Eni does not undertake to update forward-looking statements to reflect any changes in Eni s expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any further disclosures Eni may make in documents it files with the US Securities and Exchange Commission. 2

3 Highlights Production Trend Capital Investment Projects New Opportunities 3

4 High Quality Portfolio to Fuel Future Growth Solid upstream Portfolio Strong organic production growth Solid reserve replacement ratio World scale projects Selective Exploration Efficiency and strong cash generation Focus on efficiency Strong cash flow per boe Sustainable Medium/Long term growth New opportunities New initiatives in producing regions Access to high potential areas New themes 4

5 Delivering Strong Production Growth kboe/d CAGR % 4% Production: ,187 1,624 1,562 1,624 Before PSA impact: +6.4% Organic growth Delivery on projects start-ups 5

6 Solid Reserves Replacement (Sec criteria) Year-end Brent ($/bl) % at 30 $/bl Organic Reserves Replacement (%) % Proved Reserves (Bln boe)

7 Performance 6 Lifting Costs ($/boe) 2,0 Discovery Cost ($/boe) 10,0 F&D Cost ($/boe) Eni Opex Benchmark 1,5 1,0 0, Reported 8,0 6,0 4,0 2, Proforma Brent 30 $/bl '01-03 ' , , Discovery and F&D costs net of Lasmo and Fortum acquisitions; F&D costs net of Buy Back (Iran) Benchmark Group includes BP, ExxonMobil, Shell, Total, ChevronTexaco, ConocoPhillips, Eni estimates 7

8 Cash Flow and Free Cash Flow Cash Flow ($/boe) Domestic & International International '01-03 ' ,1 Free Cash Flow ($/boe) 5,2 5, '01-03 '02-04 Eni Benchmark Cash Flow = Net Income + Exploration expenses + DD&A Free Cash Flow = Cash Flow - F&D Costs 8

9 Highlights Production Trend Capital Investment Projects New Opportunities 9

10 Maintaining a Strong Production Growth kboe/d 1, % 1,624 >5% >1,700 2,000 CAGR 05/08 Growth Driven by projects build up and new startups Portfolio management 05/08 Replac. Ratio Target >100% Reference conditions: Brent 30 $/bl 2005, 28 $/bl 2006, 26 $/bl 2007, 25 $/bl

11 1Q 05 Production kboe/d % , % 1,703 Reported PSA effect (1$/bl 4kboe/d) Excluding Psa effect Brent $/bl 1Q Q

12 Selectivity and Operatorship N of producing countries Operated production (kboe/d) kboe/d < % 37% 16% 44% 7% 58% 5% 78% 6% Gross Equity ,19 mln boe/d ,62 mln boe/d ,00 mln boe/d 12

13 Human Resources for growth New Model of International Resource Management From 1 to 2 Mboe/d relying on Human Resources Resources concerned home nationals expatriates international staff Main processes and instruments: Identification of strategic resources, definition of management and development plans Change management activities Newly graduated hired from 2002: 300 re- Process engineering Knowledge Management New types of contracts and innovative compensation schemes Eni International Resources Limited: Center for recruitment, development, retention of international resources to be assigned to the Operating Companies 13

14 Process Re-engineering Opportunities Generation Opportunities Pre-drill G E 1 Evalu ation G E 2 Exp loration G E 3 Drill & Post-drill Evalu ation Target: to reduce Cycle Time, Cost and Risks Exploration G E 4 Evalu ation G1 Concept Selection G2 Concept Definition G3 Execution Development Commis. Package Commissioning, Start Up and Performance Test First Period Production G P 1 Running Production & G p 2 Running Production & Improvement Deco mmissioning Production Process remarks Decision making process based on Gates (Management decision) Projects reviews by internal independent team Internal and external benchmarking Effective planning of resources and competencies Process incentives Working teams: Integrated solutions Knowledge Management: Disseminating knowledge and experience Making individual experience a Company asset 14

15 Highlights Production Trend Capital Investment Projects New Opportunities 15

16 Capital Investment By region 17.4 Bln euro* By activity Australasia Middle East 7% 3% Americas 7% Central Asia 14% Italy 12% North Africa 21% Exploration 13% North Sea 9% West Africa 27% Development 87% * Includes opportunities 16

17 Projects Investment Criteria Selectivity based on strict capital discipline Price scenario Medium term Long term 4 year Plan 22 $/bl (2009) Capital Investment* (Bln euro) 3.8 Technical materiality Economic Criteria 0.6 Exploration Hydrocarbon reserves Probability of success Operatorship/Work. Int. Returns higher than HURDLE RATE 3.2 Hurdle Rate includes: WACC Yearly Average Development Production level Operatorship Synergies Country Risk Premium Business Premium * excluding opportunities 17

18 2004 New Exploration Acreage M$ 700 Exploration Capex (Million euro) 700 M$ % New ventures USA UK 12 blocks deepwater 22 nd nd Round 6 blocks deepwater EGYPT 6 blocks off/onshore NORWAY 18 th th Round 4 blocks deepwater RUSSIA Donbas New Acreage PAKISTAN SAUDI ARABIA 2 blocks deepwater Area C New Acreage ANGOLA Renewal Block 14 INDONESIA 1 block deepwater 0 avg (01-04) avg (05-08) Net new acreage ~ 47,000 kmq 81% operated 18

19 New Acreage in Saudi Arabia Area C Aramco Eastern Province Operated Area Rub-Al Khali Basin Gawar oil and gas Field Shaybah oil Field Joint Venture (Shell Op. 40%, TFE 30% SA 30%) Area C covers 52,000 square kilometres, located in prolific Rub Al Khali basin Eni (50%), Repsol-YPF (30%) and Saudi Aramco (20%) First exploration period: 5 years Concession agreement Commercial discoveries of gas developed for domestic market with floor price and take or pay 19

20 North Caspian Sea PSA: Exploration 100% successful Russia Kazakhstan KALAMKAS Caspian Sea KASHAGAN KASHAGAN SW Exploration completed with 100% Success KAIRAN AKTOTE Kashagan: two discovery wells K-E1 and K-W1 and 5 appraisal wells. Full 3D seismic coverage acquired. Kalamkas: discovery well in 2002, 3D seismic completed, appraisal drilling ongoing. Aktote: discovery well in 2003, 1st appraisal well drilled and tested. 3D seismic completed in Kashagan SW: discovery well in 2003 Kairan: discovery well tested in 2004, 3D seismic started in 2004 to be completed in 2005, ongoing studies to appraise discovery. 20

21 Highlights Production Trend Capital Investment Projects New Opportunities 21

22 Projects Start Ups Start-up January 05 3Q 05 3Q 05 Bomboco/Sanha (Angola) Kristin (Norway) Kizomba B (Angola) Investment $ 1.5 bn Reserves 0.44 bn boe Eni share 10% Investment $ 2.8 bn Reserves 0.5 bn boe Eni share 9% Investment $ 3.4 bn Reserves 1 bn boe Eni share 20% 22

23 200 m Projects Start Ups Start-up 3Q 05 4Q 05 4Q 05 Bahr Essalam (Libya) Bahr Essalam 2000 m 1500 m 1500 m BBLT (Angola) Benguela Tomboco 1000 m 500 m Congo Canyon 1500 m Kuito Field Belize Lobito Landana Fields Tombua Fields 7X AA Discovery Gabela-1 Discovery Bonga (Nigeria) 1000 m 500 m Investment $ 3.5 bn Reserves 1.1 bn boe Eni share 50% Investment $ 2.2 bn Reserves 0.5 bn boe Eni share 20% Investment $ 3.9 bn Reserves 0.6 bn boe Eni share 12.5% 23

24 Western Libya Integrated Project Gas Export Line Eni Gas operator (Eni 50% - NOC 50%) Subsea Clusters SABRATHA Platform GREEN STREAM Reserves (Eni share): 950 M boe Gas Production of 10.0 Bcm/Y (100%) 4.0 bscm/y - Wafa 6.0 bscm/y - Bahr Essalam Onshore Pipelines 540 Km MELLITAH Complex Wafa Coastal Plant, Mellitah Plant and gas compression station SABRATHA Local Gas Line Start up Wafa & Greenstream: October 04 Bahr Essalam: 3Q 05 WA FA Desert Plant Peak production: Eni equity: 128 kboe/d 24

25 New Projects Start-up Gendalo (Indonesia) Corocoro (Venezuela) Kashagan (Kazakhstan) 2008 New Production >400 kboe/d Investment $ 1.7 bn Reserves 0.3 bn boe Eni share 20% Investment $ 0.6 bn Reserves 0.24 bn boe Eni share 26% Investment $ 29 bn Reserves up to 13 bn boe Eni share 18.52% 25

26 North Caspian Sea PSA Kashagan Project 18.52% 18.52% 8.33% 8.33% Operator 18.52% 9.26% 18.52% Development in progress in accordance with schedule 90% of the contracts of the phase 1 have been awarded Early Works for Eskene Onshore Site nearly completed Purchase of an additional interest in the PSA (Eni %) Drilling of development wells in progress 26

27 Kashagan - Artificial island A 27

28 Kashagan - Onshore Early Works Progress 28

29 Kashagan - Export Alternatives Poland Russia Samara Existing Future alternatives To Baltic Sea Ukraine Kazakhstan CPC Atyrau Moldavia Novorossiysk KASHAGAN To China To Novorossiysk (a Bosphorus bypass is required) Makhachkala Georgia Tbilisi Azerbaijan Aktau To Aktau Uzbekistan Trans-Caspian Shipping Turkey Baku Turkmenistan Ceyhan BTC (1st lifting expected October Iraq 2005) Caspian Sea Iran Selection by early

30 Highlights Production Trend Capital Investment Projects New Opportunities 30

31 New opportunities Access to large oil reserves Middle East Development of existing resources Central Asia Non conventional oil leveraging on technological know-how Canada, Venezuela and others Gas integrated projects Far East, Mediterranean, West Africa 31

32 Gas Equity to LNG Plants Billion cubic metres/y Gas equity supplied to LNG plants 2000 '01 '02 '03 '04 '05 '06 ' Egypt - Damietta T&T Indonesia - Bontang Nigeria - Brass&Bonny LNG IPP OKPAI BEN I KU KW ALE ASHAKA AKRI ASEMOKE OML 6 0 Australia - Bayu Undan FORCADOS BEN I BOYE Gas Master Plan (land) Gas Master Plan swamp) ( Gas Transm. System 1 (N-LNG) Gas Transm. System 4(NAOC) BrassLNG OML 6 2 TU OMO W TU OMO CLOUGH CREEK AJ AKETON OGBAINBIRI AZUZUAMA TEBI DABA EKEDEI OML 6 3 ISOKO S. UMUORU OGBOGENE EBOCHA MBEDE I RRI OBRIKOM OML 61 OBIAFU OMOKU EBEGORO W SAMABRI E. SAMABRI IDU TAYLOR CR. OSHI MANUSO YENAGOA tie-in ENWHE EMETTE tie-in PI RIGBENE OBAMA NIMBE S BRAS S BONNY LNG LNG OGODA manifold P. HAR COURT 32

33 LNG Expansion for Long Term Growth (Bcm) Regas. Cameron (Lousiana) - MoU Damietta (Egypt) 2 nd train - MoU Regas. Capacity (bcm) Existing/under construction E CAMERON DAMIETTA Liquefaction Capacity (bcm) Existing/under construction E Nigeria: Bonny Train 7&8 Brass Train 2 Eni PARTICIPATION Liquefaction Regasification New initiatives New initiatives Equity production Main LNG routes 33

34 Well Positioned to seize Future Developments in Upstream High quality portfolio fueling growth in 05/08 and New Opportunities Sustaining long term growth Existing porfolio Opportunities Growth leveraging on: Operatorship Legacy countries Precesses and Technology Integrated gas projects 34

35 E&P Business Trend CSFB Oil & Gas Conference A. Belotti Senior Vice President E&P Business Planning London, June 8 th, 2005