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Transcript of ASSETS PEOPLE REPUTATION VISION 0 IPAA OIL & GAS INVESTMENT SYMPOSIUM London – July 7, 2005 STEVE...
![Page 1: ASSETS PEOPLE REPUTATION VISION 0 IPAA OIL & GAS INVESTMENT SYMPOSIUM London – July 7, 2005 STEVE SHAPIRO Executive Vice President Finance & Corporate.](https://reader036.fdocuments.net/reader036/viewer/2022070306/5519fcc0550346634a8b46c8/html5/thumbnails/1.jpg)
ASSETSASSETS
PEOPLEPEOPLE
REPUTATIONREPUTATION
VISIONVISION
1
IPAA OIL & GAS INVESTMENT SYMPOSIUM
London – July 7, 2005
STEVE SHAPIROExecutive Vice President
Finance & Corporate Development
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2
This presentation contains projections and other forward-looking statements
within the meaning of Section 27A of the U.S. Securities Act of 1933 and
Section 21E of the U.S. Securities Exchange Act of 1934. These
projections and statements reflect the company’s current views with respect
to future events and financial performance. No assurances can be given,
however, that these events will occur or that these projections will be
achieved, and actual results could differ materially from those projected as a
result of certain factors. A discussion of these factors is included in the
company’s periodic reports filed with the U.S. Securities and Exchange
Commission.
Forward-Looking Statement
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3
GAAP to Non-GAAP Terms
For an explanation of reconciliations of GAAP to non-GAAP measures please refer to the Investor Relations section of our Web site.
For additional information regarding non-SEC terms used in this presentation please refer tothe Cautionary Note on our Web site.
www.br-inc.com
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Sustaining Our Success
• Basin Excellence model is succeeding
• Enviable core asset position
• Several catalysts offer exciting step-function growth
– Bossier exploration success
• High-quality drilling inventory of 7 TCFE
• Focus on differential cost structure is paying off
• Tremendous free cash flow generating potential
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74%26%
PDP PUD
PDP/PUDWorldwide: 12.0 TCFE
Drilling InventoryWorldwide: 7.0 TCFE
BR’s Worldwide Asset Position: 12/31/04
ReservesWorldwide: 12.0 TCFE
MID-CONTINENTSAN
JUANBASIN
WESTERNCANADA
NORTH AMERICA INTERNATIONAL
LATINAMERICA
AFRICA
NW EUROPE
CHINA
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6
Company Inventory
• Opportunity sources
– exploitation
– exploration
– acquisition (asset & land)
• Inventory quality
– location-specific
– risk-adjusted
– economic at $5/$30
– land-controlled
7.0 TCFE Total Inventory
Net Project Count
Net BCFE / Project
Net Capital
/ Project
8,900 0.8 $0.9MM
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7
On Track to Meet Production Goal
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2003 2004 2005E 2006E
MM
CF
ED
North America International Guidance
3% - 8% growth
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San Juan Basin
• Sustained flat production for modest capital investment
• Gradual ramp-up in activity
• Maintain cost advantageM
MC
FE
D
Sustained ProductionSAN JUANBASIN
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Canadian Resource Focus
• Created resource assessment teams
• Completed 3 extensive studies in 2004
• 4 - 6 studies under way in 2005
0
50
100
150
200
250
300
350
2003 2004 2005E 2006E
MM
CF
ED
Sustained Production
215
160
143128
0
50
100
150
200
250
2003 2004 2005 2006
Ne
t W
ells
New Drill Activity
WESTERNCANADA
DeepBasin
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East Irish Sea
• Drill Millom and Dalton extensions
• Additional Rivers development
• Exploration: Kelly and Asland prospects
• Rivers plant stabilization
KellyProspect
Millom & Dalton Extensions
Asland
Rivers Expansion
NW EUROPE
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Andean Mountain Front
• 5.5MM net exploration acres
• Significant growth opportunities
• Ecuador, Peru and Colombia
• 2005 development: (8 - 12 wells)
• 2005 exploration:
– Jumandi well:Ecuador Block 7
– Condor well:Ecuador Block 7
– Buena Vista well:Peru Block 39
• 2005+ exploration:
– Colombia Orquidea
– Peru Blocks 57, 90 and 104
Ecuador
Colombia
Peru
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Algeria
• MLN expansion– double gas injection
capacity
– 10-well drilling campaign beginning in 2005
• MLSE/EMK development– joint development of
reserves in Blocks 208 and 405a
– 46-well drilling campaign (plus facilities)
ALGERIA
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Bakken Position
WILLISTONWILLISTONBASINBASIN
South Dakota
MontanaCanada
CedarHillsField
ELOB
North Dakota
Cedar CreekAnticline
BakkenTrend
2005 Wells
BR Minerals
• Unconventional exploration in North America
Bakken
• Acreage position– legacy: ~50,000
– 2004: ~63,000
– 2005: ~67,000
• Reserves: 300 - 500 MBO/well
• Initial production/well:500 - 1000 BOPD
• Well cost: ~$2.5MM
MID-CONTINENT
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Cedar Creek Outperformance
• Continuing to push lateral lengths
• 160-acre infill program exceeding expectations
• Bench-testing EOR optionsMID-CONTINENT
CedarCreek
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15
Bossier Activity
0
10
20
30
40
50
60
70
80
90
100
Ne
t M
MC
FE
D
2004 2005
• 5 rigs in 2005
• Expect to drill ~20 wells
• Current capital plans: ~$120MM
5th Rig
16” pipeline
3rd Rig Plant4th Rig
Actual productionProjected production
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3.1%
9.8%
7.5%7.8%
0%
2%
4%
6%
8%
10%
12%
BR BR Peers Super E&Ps Large/SuperE&Ps
0.690.62
0.810.780.90
1.06 1.08
0.79
0.00
0.20
0.40
0.60
0.80
1.00
1.20
BR BR Peers Super E&Ps Large/SuperE&Ps
2000 2004
Operating Costs/G&A Expense
Note: BR Peers include APA, APC, DVN, ECA, EOG, UCL. Super E&Ps include BR Peers, CNQ, KMG, NXY, OXY, PXD, TLM. Large E&Ps include Above plus CHK, COG, FST, NBL, NFX, POG, PPP, PXP, VPI, XTO.
$/MCFE 4-yr CAGR, %
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7.3%
11.2%
0%
2%
4%
6%
8%
10%
12%
BR BR Peers
0.961.09
1.27
1.67
0.00
0.50
1.00
1.50
2.00
BR BR Peers
2000 2004
Reserve Replacement Costs
Note: RRC numerator = total cash costs incurred for exploration, development and acquisition activities RRC denominator = total reserve adds from extensions/discoveries, revisions, improved recovery and acquisitions. Peer group includes APA, APC, DVN, ECA, EOG, UCL.
$/MCFE 4-yr CAGR, %
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Seeing Returns: How Much Money?
0.0
2.0
4.0
6.0
8.0
10.0
12.0
NYMEX - $/MMBTU@ $5.00/$30.00
Cash Provided byOperating Activities
CapitalSpendingEstimate
EstimatedDividends
$ B
illio
ns $1.4B
NYMEX - $/MMBTU@ $6.00/$36.00
NYMEX - $/MMBTU@ $7.00/$42.00
$3.4B$5.0B
Expected Cash Flow: 2005 - 2007
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Investment Choices
• Coveted asset list
• Ready balance sheet
• Willing to do the right deal
• Basin Excellence can add value
• Expect to be patient
• Effective interim use of cash
• Provides discipline on decisions
• Still a value play on BR’s reserves
• Periodic review of ordinary dividend
• Willing to consider special dividend
M&ADividend Programs
Goal to achieve growth/share + dividends > 10% per year
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20
Dividend Programs: Boring, but Beautiful
• Consistent with BR business model and shareholder expectations
• Bias for steady, cost-average approach
• Periodic review of ordinary and special dividend options
% Change, 2000 - 2004
Note: BR Peers include APA, APC, DVN, ECA, EOG, UCL. Other Super E&Ps include CNQ, KMG, NXY, OXY, PXD, TLM Large E&Ps include above plus CHK, COG, FST, NBL, NFX, POG, PPP, PXP, VPI, XTO.
Sha
re C
ount
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Adding It All Up
• Business model generates differential free cash flow
• Maintain bias for North American focus
• Pursuing selective international opportunities
• Expect industry consolidation to accelerate
• Will carefully weigh and time investment choices
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ASSETSASSETS
PEOPLEPEOPLE
REPUTATIONREPUTATION
VISIONVISION
22
IPAA OIL & GAS INVESTMENT SYMPOSIUM
London – July 7, 2005
STEVE SHAPIROExecutive Vice President
Finance & Corporate Development