E & P Business Trends - Eni: energy company · E & P Business Trends Stefano Cao Chief Operating...

E & PBusiness Trends

E & PBusiness Trends

Stefano CaoChief Operating Officer

Exploration & Production Division

Stefano CaoChief Operating Officer

Exploration & Production Division

January 2003January 2003

2RoadShowJan03

PortfolioPortfolio

Capital InvestmentCapital Investment

EfficiencyEfficiency

Production TrendProduction TrendProduction TrendProduction Trend

3RoadShowJan03

Strong Production Growthkboe/d

394 358 333 308 316

236 269 306 318 349

196 205 224 233 238156 154 168 287 30756 77

156

223261

1998 1999 2000 2001 2002E

Rest of World

North Sea

West Africa

North Africa

Italy

CAGR ~ 9.7% 7.5%

1,4711,4711,3691,369

1,0381,038 1,0641,0641,1871,187

4Q ‘02E Average production 1,521 kboe/d4Q ‘02E Average production 1,521 kboe/d

4RoadShowJan03

AboveAbove1,8001,800

CAGR 9.7%7.5%

~ 6%inclusive of Fortum

AboveAbove1,7001,700

Maintaining a Strong Production Growth*kboe/d

* Net of portfolio rationalization

2005target

PreviousPrevious targettarget2001 2001 -- 2005 CAGR 2005 CAGR 6%6%20052005 Production Production aboveabove 1,700 1,700 kboekboe/d/d

2002E1998 2001 2006target

1,0381,038

1,4711,4711,3691,369

5RoadShowJan03

Production Distribution

2002E2002E 20062006

West Africa16%

North Sea21%

Rest of world18%

Italy21%

NorthAfrica24%

1,471 kboe/d1,471 kboe/d >1,800 kboe/d>1,800 kboe/d

West Africa20%

North Sea14%

Rest of world24%

Italy14%

NorthAfrica28%

2,100 kboe/d Operated production (gross) 3,100 kboe/d

900 kboe/d 1,300 kboe/d

61 % 71 %Operated production (equity)

6RoadShowJan03

Production Contributionskboe/d

Main fields! Karachaganak! Dacion! Hapy! Bhit! Darfeel! Nigeria upstream

LNG

>1,800

1,471

2002Producing

fields

Main fields! Abo (2003)! Wafa (2004)! South Pars (2004)! Kizomba A (2004)! Bonga (2004)! NC41 (2005)! Kashagan (2006)

! Fortum (2003)

Newproduction

73%

27%

Depletion +Rationalization

Net increaseProducing field

New production2002E 2006

7RoadShowJan03

PortfolioPortfolio



Production TrendProduction Trend

PortfolioPortfolio

8RoadShowJan03

Portfolio Rationalisation: actions delivered

ITALYDisposal of 25% stake in Tempa Rossa

ITALYDisposal of 25% stake in Tempa Rossa

QATAR

Disposal of 45% stake in Al Khalij(-13 kboe/d in 2003)

QATAR

Disposal of 45% stake in Al Khalij(-13 kboe/d in 2003)

UKPhase 1 - 2

UKPhase 1 - 2

9RoadShowJan03

Rationalization in Progress:UK Results after Phase 2 conclusion

" Disposal of 19 commercial fields, 10 marginal/dormant discoveries and 14 exploration blocks

" Acquisition of 8.9% in Liverpool Bay and 11.3% in Tblock

" Reduction in production (kboe/d) 2003: -23 2006: -15

" Unit operating costs from 5.0 $/boe to 4.5 $/boe in 2003

" Sale or relinquishment of 95 blocks out of a total of 200

NPV

EFG

Live

rpoo

l Bay

are

aT

Blo

ckJ

Bloc

kFl

otta

CA

ETA

P_A

rea

And

rew

Mar

kham

Mac

Cul

loch

Mag

nus_

Area

Nin

ian

B Bl

ock

Brae

Pilo

tBl

ane

Fyne

& D

andy

Bei

nnH

ewet

tAre

aG

alle

yO

tter

Jani

ceC

olum

baAr

mad

aH

udso

nR

oss

Coo

kPi

erce

Gol

dene

yeBa

nff

Rav

ensp

urn

Nor

thTr

ees

Blo

ckJo

hnst

onR

Blo

ckPi

cker

illEv

eres

tFo

rties

Uni

tC

hest

nut

Wes

twic

kC

raw

ford

Dev

enic

kTh

ames

_Are

aS

olan

Sui

lven

Mar

iner

All disposed All disposed

Inprogress

10RoadShowJan03

Fortum Acquisition

+ 14% production in the North Sea+ 17% reserves in the North Sea

Cost synergiesUS$ 10 mm per year

Higher concentration: 76% of acquired reserves in already participated assets

+ 40,000 boe/d production in Norway (+40%) in 2003

Accretive to Eni’s EPS and CFPS from 2003

Leverage participation Leverage participation level level

Focus on strategic valueFocus on strategic value

Capture growth potentialCapture growth potential

Strict financial disciplineStrict financial discipline

SynergiesSynergies

DEAL RATIONALE

11RoadShowJan03

Portfolio Rationalization: next steps

2003-06 PROGRAM

" Disposal of assets in non-strategic areas

" Dilution in projects with high investments and deferred return

CRITERIA

" Focus on strategic value

" Capture growth potential

" Leverage participation level

" Synergies

2003-06 PROGRAM

" Disposal of assets in non-strategic areas

" Dilution in projects with high investments and deferred return

CRITERIA

" Focus on strategic value

" Capture growth potential

" Leverage participation level

" Synergies

12RoadShowJan03

Capital InvestmentCapital InvestmentCapital InvestmentCapital Investment

PortfolioPortfolio



13RoadShowJan03

2003-2006 Capital Investment

Activity distribution

* Inclusive of Fortum acquisition

15.6 Bln euro*15.6 Bln euro*(defined projects only)(defined projects only)

Regional distribution

Development *86%

Exploration14%

West Africa21%

North Sea14%

Others10%

Italy11%

NorthAfrica23%

Central Asia11%

Americas10%

14RoadShowJan03

Countries with more than 1 Bln euro Investment

Libya

Norway

Angola

Italy

Kazakhstan

Nigeria

Iran

Egypt

USA

ExplorationDevelopment Acquisition

2.3

1.7

1.9

1.5

1.4

1.1

1.0

1.0

2.0

89%89% of total investment in of total investment in 99 countriescountries

15RoadShowJan03

New Production from West Africa

KISSANJE

MARIMBA

DIKANZA

HUNGO

A20 NA20 CA20 S

A32 S

A17

A17 SCHOKALHO

XIKOMBA

Kizomba AKizomba B

A B

250 KbopdFPSO

DDCV

Kizomba A (2004)

KISSANJE

MARIMBA

DIKANZA

HUNGO

A20 NA20 CA20 S

A32 S

A17

A17 SKizomba A

Kizomba BA BCHOKALHO

XIKOMBA

250 KbopdFPSO

250 KbopdFPSO

DDCV

DDCV

Kizomba B (2006)

Xicomba (2004)FPSO

Drill Center 24 Prod Wells

1 GI Well

Drill Center 32 WI Wells

Drill Center 12 WI Wells

3.4 km3.9 km

4.1 km

Belize/Benguela (2006)

Oil / Water / G

as

Make-up Gas

Future HPInjection Gas

SouthSanha

SanhaCondensate

Complex

Bomboco

EastKokongo

NorthN'Dola

Pumped Oil / Condensate to EK / MalongoMake-upGas

Sanha LPGFuel Gas

Area ALPG

F-GIPLPG FPSO

Drilling/Production

Compression/Processing

Quarters

RemoteFlare

FuelGas

Make-upGas

NorthSanha

Greggioa Malongo

Oil

Sanha condensate (2004)

2° phase

AboN 2Abo North

Abo CentralAbo2

Abo4Abo3

Abo (2003)Bonga (2004)

Angola

Nigeria

Total production 2006~ 110 kboe/d


16RoadShowJan03



BALTIM EAST

12" (gas+cond.) + 3" (glycol) + 4" (water) - 16 km

NEMBALIFUA

KALILIVUITE GASN'KASSA

BALTIM NORTH

BALTIM SOUTH Existing monopode

4" (water - existing)

New facilitiesExisting facilities EL QAR'A PLANT

(upgrading)

Shore

Baltim North (2006)

C-NC41

CN2

CN1

C-WESTC-EAST

diam

. 36"

L =

110

Km

Gas

Gas Export to Sicilydiam . 32" L = 540 Km

Shore plant & gas compression Mellitah

Wafa plant

Gasdia

m32

" L =

550 K

moil

&co

nd. D

iam. 1

6”

ZUARA

MELLITAH

SABRATHA

LIBYA

TUNISIA

ALGERIA

diam

. 10"

L =

110

Km

Cond

ensa

tes

C-NC41

CN2

CN1

C-WESTC-EAST

diam

. 36"

L =

110

Km

Gas

Gas Export to Sicilydiam . 32" L = 540 Km

Shore plant & gas compression MellitahShore plant & gas compression Mellitah

Wafa plant

Gasdia

m32

" L =

550 K

moil

&co

nd. D

iam. 1

6”

ZUARA

MELLITAH

SABRATHA

LIBYA

TUNISIA

ALGERIA

diam

. 10"

L =

110

Km

Cond

ensa

tes

Wafa (2004) - NC41 (2005)Elephant (2004)

B R S W

B R W E x t .

R E R - 1

R O D - 1

R O D - 2

B S F N - 1

B R S E - 1

R D B - 1

B R S E - 2

B S F

R E R N

R D B

P 4 0 3 d - A g ip

P 4 0 1 a - B H P

P 4 0 2 a - B H P

M

B S F N - 2

B R W

R E R N -1

Z E F -1

R E R - 2

R E R N -2

R O D - 4

R O D - 3

B S F - 2

S F - 1

B R N - M e s d a r 2 0 ” 2 3 0 K m

P o z z o p r o d u t to r e

P o z z o i n i e t to r e d ’ a c q u aP o z z o i n i e t to r e d i g a s

C e n tr o o l io

L i n e a o l ioL i n e a a c q u aL i n e a g a sO le o d o t t o

0

K m

5 1 0

M M a n i f o ld

R E R N -3

M

C e n t r o O l iod i B i r R e b a a

S F N E -1

B S F - 1

TUNISI

A

LI

BI

AA L G E R I A

A L G E R IS K IK D A

A N N A B A

H A S S I R ’ M E L

H A S S I M E S S A O U D

P 40 3 d

P 40 1 a

P 40 2 a

M a r M e d i t e r r a n e o

S F N E

M

M

S F N E -2

R O D

B R N

ROD 401/402 (2004)

Block 208 (2006)

New Production from North Africa

Algeria Libya EgyptEL QAR'A #3 Area

Mediterranean SeaAzzawiyah Terminal •

Tripoli

30”x725 km PIPELINE (EXISTING)

NC-115

24” PIPELINE75 km

Escarpment

CE

A GOSPAccommodatio

n

Camp

D

B

Overhead Power from NC-115

Wellpads

Pump StationHamada NC8 Field

Provision for future Pump Station

Provision for future Pump Station

17RoadShowJan03

New Production from Europe

Gasdotto SNAM Rete Gas esistente Porto Ortona

Ortona

Gasdotto di nuova costruzione

Oleodotto di nuova costruzione

Miglianico (2004)

Sicily IslandSicily IslandAgrigento

GelaLicata

Prezioso Perla38 Km

T Laiala(future)

12"+4"17 Km

12"+3"12 Km

T Vitalba(future)

Fondale 460 m

36” Rete Gas

32”

29 Km

Panda (2005)

Kristin (2005)

Fortum (2003)

HEIDRUNHEIDRUNASGARDASGARDMIKKELMIKKEL

BRAGEBRAGE

GOLIATHGOLIATH

Annamaria/Ika/Ida/Marica (2004)

ItalyCroatia

Norw

ayIVANA AIVANA AIVANA EIVANA E

IVANA BIVANA B

IDA AIDA A IDA CIDA BIDA B

IKA BIKA BANNAMARIA AANNAMARIA A

ANNAMARIA BANNAMARIA BMARICAMARICA

GARIBALDI KGARIBALDI K

CABOPLANT

FALCONARAPLANT

BT2BT224” (70Km)24” (70Km) 14

” (18Km)

14” (18

Km)

16” (67Km)

16” (37Km) 16” (44Km)18” (44Km)

18” (22Km)18” (22Km)

IKA AIKA A

16” (45Km)16” (45Km)

IVANA KIVANA K

PULATREATMENT

PLANT

20” (22Km)

16”

(67K

m)

Italy

Croatia

AdriaticSea



18RoadShowJan03

Phase 1 Experimental ProgramPhase 2Phase 3

Kazakhstan - Kashagan

" June 2002: declaration of commercial discovery

" Recoverable reserves: 7-9 billion boe(depletion case); 13 billion with partial gas injection

" Appraisal activity 2 wells completed; 2 under testing

" December 27, 2002: development plan submitted to the Authority

" Kalamkas 1 (new exploration well) discovered oil & gas in a new play; test flow rate 2.3 kbopd

19 18

1716

7

9

12

11

5KEKW

6

4

8

10

13

15

14

20

23

2221

24

3 2 1

19RoadShowJan03

PortfolioPortfolio





20RoadShowJan03

New E&P Organization

Drivers

" Larger size of the Company

" Number and size of assets and new projects under management

" Focus on efficiency and value creation

" Improved utilization of know how and best practices

" Availability of skilled management

" Development and application of new technologies

Drivers

" Larger size of the Company

" Number and size of assets and new projects under management

" Focus on efficiency and value creation

" Improved utilization of know how and best practices

" Availability of skilled management

" Development and application of new technologies

21RoadShowJan03

New Ventures& Business Planning

Accounting& Control

LegalAffairs

Human Resources& Organization

RESERVES

Chief Operating OfficerChief Operating OfficerE&P DivisionE&P Division

New E&P Organization

Country’s strategy, budget and operations management

Geographic Area

Kazakhstan Italy, Africa and Middle East

Geographic Area

North Sea, Americas, Australasia,

Russia and Azerbaijan

Geographic Area

Selection, management and responsibility for exploration projectsEXPLORATION

Management and responsibility for key projectsManagement and responsibility for key projectsDEVELOPMENTDEVELOPMENT

22RoadShowJan03

Cost CuttingMillion euro

Target1999-03

Target1999-05

Target1999-06

113%of target

9999--02E02E

560

500500

650650

870870

23RoadShowJan03

Focus on Unit Costs

0

50

100

150

200

250

300

350

400

97-99 98-00 99-01

141146140

0

1

2

3

4

5

6

7

8

9

10

97-99 98-00 99-01

1.5**1.71.8

0

1

2

3

4

5

6

7

8

9

10

97-99 98-00 99-01

5.2**5.35.4

Discovery costs($/boe)

F&D costs($/boe)

17% 17% reductionreduction

4% 4% reductionreduction

Reserves Replac. (excl. acquis.)(%)

* Benchmark Group includes BP, Exxon Mobil, Shell, Chevron Texaco, TotalFinaElf, Conoco, Phillips, Repsol YPF** Net of Lasmo acquisition

Eni Benchmark Group*

24RoadShowJan03

2.6 2.5 2.6

0

1

2

3

4

5

6

97-99 98-00 99-01

Focus on Unit Costs

Eni Benchmark Group*

Lifting costs($/boe)

0

1

2

3

4

5

6

97-99 98-00 99-01

3.7 3.63.8

Operating costs($/boe)

* Benchmark Group includes BP, Exxon Mobil, Shell, Chevron Texaco, TotalFinaElf, Conoco, Phillips, Repsol YPF

E & P Business Trends - Eni: energy company · E & P Business Trends Stefano Cao Chief Operating...

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