2012 Global Unit Gas Cleaner and Better - E.ON2012/01/17 · LNG increasingly interconnects 3 main...
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E.ON – Cleaner & better energy Global Unit Gas
Transcript of 2012 Global Unit Gas Cleaner and Better - E.ON2012/01/17 · LNG increasingly interconnects 3 main...
E.ON – Cleaner & better energy
Global Unit Gas
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Sustainable performanceculture
Selective efficiency programs
Focus on competitive businesses
Integrated across value chain
Competence-based Capital intensive
Targeted expansion outside Europe
Eurocentric
ToFrom
EuropeFocused & synergisticpositioning
OutsideEurope
Targetedexpansion
PerformanceEfficiency &
effective organization
Cleaner & better energy
InvestmentLess capital,more value
E.ON strategy
Transform European utility into global, specialized energy solutions provider
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E.ON Group strategic priorities
Markets require intensified self-help measures
Performance
Intensify cost & quality management
Simplify structures
Execute portfolio measures
Create balance sheet flexibility
Capture growth in renewables & decentralized energies
Exploit opportunities in new markets
Growth
Challenging markets
Political interventions
Europe: System transformation
Outside Europe: Growth & new technologies
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2011E Adjusted EBITDA €bn 9.1 – 9.31
Adjusted EPS €/share 1.2 – 1.31
2013E Adjusted EBITDA €bn 11.6 – 12.32
Adjusted EPS €/share 1.7 – 2.02
2015E Adjusted EBITDA €bn 12.5 - 13.03
Adjusted EPS €/share 2.0 – 2.33
Results
Dividend payout policy % adj. net income 50 – 60
2011E €/share 1.0
2012E €/share 1.1
2013E €/share ≥1.1
Dividends
Rating target Solid single A
Medium-term debt factor <3x
Investments 2011-13 €bn ~19
Total disposals until 2013 €bn ~15
Other
Transparent financial targets for coming yearsAssumed 2015 debt factor allows ~€6bn of additional growth CAPEX
1. 2011 post €0.5bn effect of achieved disposals (€9.1bn) 2. 2013 post €0.9bn effect of achieved disposals (€9.1bn) 3. 2015 post ~€1.7bn effect of total disposals (€~15bn)
E.ON Group key financial targets
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Global Unit Gas within E.ON’s structure
Leaner and more market oriented organization
Generation RenewablesSupport functions
TradingOther EU countries
Germany Russia
Group Management
Upstream
Midstream
Transport/Shareholdings
Other/Consolidation
Gas
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Paradigm shift in European gas markets – Portfolio shift towards upstream and optimization
Market environment
Gas – Executive summary
Systemic change of gas market functioning
Decoupling of oil-linked LTCs and hub prices
Hub prices & forwards relevant price signal
Growing integration of European markets
Tightening of global LNG & regional shift
Uncertainty of long-term gas demand growth in Europe
Develop further focused & skill-based upstream position
Production to expand by >20% between 2010 and 2013
Adj. EBITDA to increase from €0.7bn (2010) to €1.7-2.1bn (2013)
Enhance optimization earnings by adjusting portfolio and bundling of gas supply, optimization and trading activities
Renegotiation objective: restore competitiveness of LTCs and derisk Supply & Sales business
Renegotiation parameters: price level, indexation and review mechanism
37% of LTC volumes successfully renegotiated so far
Arbitration with Gazprom initiated
Portfolio re-orientation towards upstream and optimization
Adapt LTCs to changed environment
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Gas – Financials and outlook
Strong increase in upstream - Supply & Sales to return to normal in 2013
OutlookEarnings drivers
0.10.1-1.6Other/Consolidation
0.40.520.0Midstream
Gas – FY 2010 financials
1.42.021.4Gas
0.50.71.6Transport/Shareholdings
0.40.71.4Upstream
Adj. EBITAdj. EBITDASales€bn
Main earnings drivers
Upstream: further production growth andhigher prices
Midstream: return of Supply & Sales to normal after losses in 2011
Outlook 2011 compared to 2010
Upstream: marginal improvement thanks to higher prices
Midstream: loss of less than €1bn assumed for Supply & Sales
Target 2013 compared to 2010
Upstream: significant increase due to higher production and prices
Midstream: return to normal level assumed for operational Supply & Sales business
2010A 2011E 2013E
€2.0bn€1.1-1.6bn
Discussion Material
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Global perspective (I)
Gas is not only a ‘bridge’ – it is a ‘destination’ fuel into a lower-carbon world
Economic growth and energy policy are key determinants of future gas demand:
Advantages of natural gas
Ample supplies globally
Cleanest of all fossil fuels
Highly efficient and flexible
Complement to renewable energy
Environmental context
Reduction of CO2-emissions
Improved energy efficiency
Increased deployment of renewable energies
Development of world gas demand
Source: IEA World Energy Outlook 2011, p.159, 544 ff.
2009 20352020
Power
Nonpower
3,0763,888
bcm
450 ppmscenario
New policiesscenario
4,750
0 100 200 300 400 500 600 700 800
AfricaSouth America
EU27North America
Central-/Eastern EuropeMiddle EastAsia/Pacific
bcm
2009-2035 gas demand growth by region
Key driversCurrent policies scenario
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LNGLNGLNG
Global perspective (II)
LNG increasingly interconnects 3 main gas regions, despite very different market structures
LNG flows and pricing of purchase contracts
Increasing import dependence
Long term contracts & spot markets
Europe
Import dependence
Oil-indexed long term contracts dominant
Asia
Self-sufficient
Spot markets dominant
North-America
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GTF
NBP
PSV
CEGH
GUD
TIGF
PEG S
TTF
NCGZEE
PEG N
liquid illiquid
Development of European gas markets (I)
Functioning integrated market for natural gas in Europe expected by mid/end of decade
Transparent and competitive market environment
Market opening through national regulation
Cross-border market integration by European regulation
European gas hubs: continuing growth of volumes and deepening of liquidity
Strong correlation between national trading hubs (NBP, ZEE, TTF, NCG)
Decoupling of oil-based LTC prices and hub prices
Integration of European markets Changing market environment
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Development of European gas markets (II)
Natural gas hubs set today the relevant price signals in the markets
Prices for oil as competing fuel for natural gas barely matter anymore in the more liquid European markets
Hub prices and forwards have become relevant price signals for wholesale customers
Various price elements in the markets (e.g. fixed price, oil-indexation, spot price, forwards, options, …).
Pricing of long-term import contracts Pricing of sales contracts
Fixed prices
Oil price linkHeavy fuel oil component
Light fuel oil component
Coal component
Spotcompo-nent
€/M
Wh
BAFATTF
2013
Forw
ards
0
5
10
15
20
25
30
35
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Gas price link
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Portfolio Optimization
Integrated portfolio optimization
Diversified and complementary supply, transport, storage and sales portfolio
Intense cooperation across E.ON Group
Examples
Supply optimization: Various supply contracts and delivery points as well as access to transportation capacity create opportunities to minimize sourcing costs
Sale of virtual storage in one country backed by physical storage in another country creates opportunities to optimize physical storage
Portfolio Optimization
Gas salescontracts
Gas supplycontracts
E&P
LTC
LNG
Internalcustomers
External customers
TSO‘S SSO‘s
GasPositions
Oil & coalPositions
Gas hubs(NBP, TTF, NCG)
Oil & coalmarkets
Transportcapacities
Storagecapacities
Integrated portfolio optimization across the group creates additional value
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Active in entire E&P value chain with focus on early phase
Active as operator and non-operator
Strong skill set: expanding role as operator
North Sea: operating exploration (Norway), developing (UK) & producing fields (UK)
North Africa: onshore operator (Algeria)
Upstream
53 licenses(14 operated)
6 developments(3 operated)
12 producing fields(4 operated)
Exploration &Appraisal
Production
Development
0
20
40
60
2007A 2008A 2009A 2010A 2011E 2012E 2013E
Russian gas North Sea gas Oil
Portfolio Production
Adjusted EBITDA
2009A 2010A 2011E 2013E
Continuous build up of production
First produc-tion of Skarv in 2012
Experienced & skilled niche player
€bn
mmboe
Contribution of Skarv
Increase of oil and gas prices
0.70.7-0.9
1.7-2.1
0.4
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Midstream – Supply & Sales (I)
Long-term import contracts (LTCs) require adaptation to changed market environment
Long-term supply commitment
Obligation to supply atcompetitive prices
Long-term “Take or Pay“purchase commitment
Obligation to actively develop market
Producer bears price riskImporter bears volume risk
Basic principles of LTCs
Efficient sales channel for large volumes
Prerequisite for significant upstream and transport investments
Entitlement to periodic renegotiation (price reviews)
New developments/adaptations
Hubs set relevant price signals
Faster reactions to market developments and changed environment necessary
Need to reflect changed market conditions (price level, indexa-tion and adjustment conditions)
2010 2020 2030 2040
Profile of LTC maturities
Gas sourcing 2010
Russia27%
Nether-lands17%
Germany23%
Others 8%
E.ON Ruhrgas 685 TWh1
Others (mainly E.ON Földgaz )135 TWh
Norway25%
-schematic-
1. Gas year 2009-10
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Midstream – Supply & Sales (II)
Ensuring sustainability of LTCs on track – already more than 1/3 successfully renegotiated
Objective is to adjust LTC prices to fundamentally changed market conditions, i.e. to restore an appropriate risk/return profile for the Supply & Sales business
Several agreements on adjustment of LTCs already concluded, corresponding to more than 1/3 of supply volumes for 2011
Besides substantial price reductions, adjustments have been achieved to address structural solutions as well; negotiations for further adjustments continue
Arbitration proceedings with Gazprom initiated; it is expected that commercial discussions continue in parallel
Renegotiation with Statoil started on 1 Jan 2012
Status of LTC re-negotiations
Renegotiated~ 37%
Undernegotiationsince 2011
~ 40%
Additionalrenegotiation
since 2012~ 23%
Outlook Supply & Sales
2011 outlook: loss of less than €1bn
2013 target: return to normal level assumed for operational Supply & Sales business. Upside potential out of additional catch-up effects from previous periods
Uncertainty about final timing of commercial agreements or arbitration decisions create uncertainty about earning levels
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0
2
4
6
8
10
2009A 2010A 2011E 2012E 2013E
OLT Livorno
GATE
Grain
Huelva
Barcelona
Midstream – Supply & Sales (III)
Diversified access to LNG regas capacity provide destination and pricing flexibility
LNG imports complement pipeline imports to offset decline of gas production in Europe
Global competition for available LNG volumes
LNG flows determined to a large extent by differences in prices between various gas consumption regions
E.ON’s LNG regas portfolio ensures direct access to all major European gas markets and creates destination and pricing flexibility for the LNG business
LNG regas capacity (bcm/a)1
1. LNG regas capacity in E.ON Group2. Capacity according to project share (under construction)
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Midstream - Gas Storage
Flexible storage portfolio to meet demand in alternative market environments
E.ON Gas Storage (EGS) is one of the leading underground gas storage companies in Europe
~11 bn m³ of working gas capacity in Central Europe (2010)
Projects in Germany, Austria and UK
Operating and/or marketing the capacity of 22 existing storage facilities
Front runner in transparency and capacity marketing
Attractive and innovative products and services
On the trunk line to main transport/transit routes and trading hubs
R&D of new technologies, such as H²- and compressed air storage
Gas storage capacities (bcm)
0
3
6
9
12
2007A 2008A 2009A 2010A 2011E 2012E 2013E
Germany Austria UK Hungary
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Transport - Open Grid Europe
Market and innovation leader of the German gas transmission system
Highest market share in Germany by grid length (~12,000 km)
Set up of NetConnect Germany (NCG), the most liquid trading point in Germany since 2008
Expansion of NCG by GRTgaz Deutschland, ENI Gas Transport Deutschland and GVSNetz in 2009
Integration of OGE L-Gas and Thyssengas into NCG by 04/2011
Adaptations of transport tariff system in 2008/2009, start of incentive regulation
Implementation of ITO-Model (3rd EU regulatory package) in 2010/2011
Evaluation of strategic options
Network of Open Grid Europe
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Transport – Supply related shareholdings
Key role of infrastructure assets in securing long-term supplies
Main supply related pipeline assets:
15.5% in Nord Stream
15.09% in Interconnector
20% in BBL
10% in NEL
20% in OPAL
Increasing European security of supply via further diversification of transportation routes and by linking new sources of supply (4th corridor)
Intra-European transport infrastructure bridge price differentials between markets
Pipeline assets provide attractive returns and stable earnings
OPALNEL
BBL
Nord Stream
Interconnector
TAP
Southern supply corridor
In operationUnder constructionProject phase
Main pipeline assets
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Other Shareholdings
Shareholdings allow stable returns and synergies with core business
Operations in transit and growth markets
Development of regional markets
Realization of market potential and synergies between the shareholdings
Value enhancement through operational excellence
Main businesses and shareholdings outside Germany:
Hungary: 100% of E.ON Földgaz Trade
Slovakia: 24.5% in SPP, 40.5% in Nafta
Finland: 20% in Gasum
Baltic countries: 47% in Latvijas Gaze, 39% in Lietuvos Dujos, 34% in Eesti Gaas
Luxemburg: 11% in Enovos
Geographic presence
Countries with limited presence
Countries with strong presence
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E.ON Investor Relations Contact
Sascha BibertHead of IR T +49 2 11-45 79-5 42
Peter BlankenhornManager T +49 2 11-45 79-4 81
François PoulletManager T +49 2 11-45 79-3 32
Marc KoebernickManager T +49 2 11-45 79-2 39
Dr. Stephan SchönefußManager T +49 2 11-45 79-48 08
Aleksandr AksenovManager T +49 2 11-45 79-5 54
Carmen SchneiderManager T +49 2 11-45 79-3 45
Sabine BurkhardtExecutive Assistant T +49 2 11-45 79-5 49
What can we do to help you?
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E.ON IR and reporting calendar
Dividend paymentMay 4, 2012
DüsseldorfInterim Report II: January – June 2012August 13, 2012
DüsseldorfInterim Report I: January – March 2012May 9, 2012
EssenAGM 2012May 3, 2012
DüsseldorfAnnual Report 2011March 14, 2012
LocationEventDate
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This presentation may contain forward-looking statements based on current assumptions and forecasts made
by E.ON Group management and other information currently available to E.ON. Various known and unknown
risks, uncertainties and other factors could lead to material differences between the actual future results,
financial situation, development or performance of the company and the estimates given here. E.ON AG does
not intend, and does not assume any liability whatsoever, to update these forward-looking statements or to
conform them to future events or developments.
