Exploration & Production Company - .a meaningful company doing meaningful work delivering meaningful
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53a meaningful company doing meaningful work delivering meaningful results
Exploration &Production Company
54
Todays Agenda
Opening Thoughts
E&P Overview
2006 Comments
Business Priorities
Division Reviews
2007 Plan Summary
55
Goal To Be Top E&P Performer
Solid foundation of people and assets in place
Ability to replace reserves from identified inventory
Organization executing at higher level of activity
Build credibility on performance
Provide visibility on future growth
Improve capital and operating efficiency
56
El Paso E&P: Top 10 IndependentTotal Company
Total year production of 798 MMcfe/d
Year-end reserves of 2,637 Bcfe*
R/P: 9.1
*Includes our 43.1% share of Four Star; all data 2006 unless noted
Egypt
Texas Gulf Coast
Total year production of187 MMcfe/d
Year-end reserves of406 Bcfe
R/P: 6.0
Onshore*
Total year production of 413 MMcfe/d
Year-end reserves of 1,711 Bcfe
R/P: 11.3
Brazil
Total year productionof 24 MMcfe/d
Year-end reserves of 248 Bcfe
R/P: 28.7
GOM/SLA
Total year production of174 MMcfe/d
Year-end reserves of272 Bcfe
R/P: 4.3
Egypt
2 exploration blocks
NileDelta
Sinai
EgyptGulf
ofSuez
Brazil
Rio de Janeiro
57
2006 Production Mix798 MMcfe/d
International24 MMcfe/d
3%
TGC187 MMcfe/d
23%
GOM174 MMcfe/d
22%
Onshore413 MMcfe/d
52%
2007 range: 800860 MMcfe/d500
600
700
800
900
2005 2006
MM
cfe/
d
El Paso Production Trend
Note: Includes our 43.1% share of Four Star
58
2006 YE Proved Reserves2.6 Tcfe
Onshore1,711 Bcfe
65%
GOM272 Bcfe
10%
TGC406 Bcfe
15%
Int'l248 Bcfe
10%PUD27%
PDP62%PDNP
11%
Note: Includes our 43.1% share of Four Star; all data 2006 unless noted
59*Includes our 43.1% share of Four Star; see appendix for further information
Reserve Reconciliation*
Beginning balance 12/31/2005
Production
Extensions and discoveries
Sale of reserves in place
Purchases of reserves in place
Performance Revisions
Reserves before Price Revision
Price Revision
Ending balance 12/31/2006
2,668
(291)
299
(20)
2
40
2,698
(61)
2,637
Equivalent(MMcfe)
60
2006 E&P Capital by Division$1.2 Billion
2007 capital: $1.7 billion
GOM$310 MM
26%
TGC$217 MM
18%
Int'l$83 MM
6%
Onshore$500 MM
42%
Admin. & Other$91 MM
8%
61
2006 YE Project Inventory
Unrisked Wells
Gross well count
Net Risked Resource
Resource potential (Bcfe)
Technically mature
Technically immature
2,389
625
500
318
310
180
159
180
650
141
660
170
3,007
1,775*
1,500
Onshore TGCGOM/SLA Intl Total
More than 5 years of project inventory
*Includes 724 Bcfe of PUD reserves including 35 Bcfe of Four StarNote: See cautionary statement on non-SEC proved reserves
62
2006 Accomplishments
4%* organic production growth
117%* reserve replacement excludingprice revisions
PVR > 1 at $5.50/$37.00; 1.3 at 12/31/06 strip
Gross well count up by ~30%
High drilling success rates on major programs
*Includes our 43.1% share of Four Star; see appendix for further information
63
2006 Accomplishments
Integrated East Texas and Rockies acquisitions
Announced significant acquisition for Texas Gulf Coast
New country entry in Egypt
Permit approval on Pinana (Brazil) exploration wells
Continued efforts on process improvements
Exited with 5 years of drilling inventory
64
2006 Challenges
Volume and reserve performance impacted by:
Extended GOM hurricane recovery operations
Delayed cycle-times from services shortages
Service cost pressures
Early phase International spending impact
Industry-wide staffing shortages
65
Priorities for Profitable Growth
Get the right assets, get the assets right
Focus on fundamentals
Drive Performance Delivery Model concepts
66
Balanced Portfolio
Region RiskGrowth
Potential Cash Flow
Onshore
TGC
GOM/SLA
Low
Low/Med
Med/High
Med/High
Moderate
Moderate
Low Flat
High
Generator
Neutral
Generator
UserGOM Int'l
GOM Ons. TGC Int'l
Onshore TGC
(Pc < 40%)High
Med
(Pc > 80%)Low
Ris
k
Intl
67
Attention to Fundamentals
Strive to be full-cycle, low-cost
Benchmark to assess relative performance
Attract and retain excellent people
68
E&P Performance Delivery Model = Success
69
It All Starts With Inventory
All employees doing impact work
Robust database of future ideas
Characterized by consistent criteria
Value
Capital efficiency
Size and impact
Generated or re-loaded from:
Base production optimization
Resource studies
Exploration activities
Acquisitions
License Ready
Drillable
Concepts
Leads
Prospects
Recommended
Rig Ready
Resource Potential Geologic risked Mean
Tec
hn
ical
ly M
atu
reT
ech
nic
ally
Imm
atu
re
Mat
uri
ty a
nd
Exe
cuti
on
Cer
tain
ty
Low
High
70
Striving for Excellence
Learning organization
Growing competencies
Project management
Operations excellence
Improved safety
Average Rig Activity
2005 2006
WorkoversRecompletionsDrilling & completion
24
115
40
31
16
9
56
71
Onshore
72
Lower-48 Unconventional Resources
*Includes our 43.1% share of Four Star except net acres; all data 2006 unless noted
Rockies
Production: 55 MMcfe/dReserves: 246 BcfeNet acres: 364,000
Raton Basin
Production: 76 MMcfe/dReserves: 343 BcfeNet acres: 605,000
Arklatex
Production: 122 MMcfe/dReserves: 448 BcfeNet acres: 104,000
Mid-Continent
Production: 28 MMcfe/dReserves: 110 BcfeNet acres: 319,000
Black Warrior Basin
Production: 64 MMcfe/dReserves: 342 BcfeNet acres: 172,000
Total Onshore*
Production: 413 MMcfe/dReserves: 1,711 BcfeNet acres: 1,692,000Base decline: 20%R/P: 11.3
73
Onshore Characterization
High-quality, concentrated asset base
Material core positions
Extensive project inventory
Strong positions in resource plays with running room
Geared for $500 MM$550 MM annual capital spend
Targeting repeatable, low-risk programs
Predictable, mid-single digit production growth
74
Onshore Organic Production Growth
4Q 2005 1Q 2006 2Q 2006 3Q 2006 4Q 2006
Base Capital Uplift
405 405 411 415420
Average MMcfe/d
Note: Includes our 43.1% share of Four Star
75
2006 YE Onshore Project Inventory
Rockies
Black Warrior
Arklatex
Mid-Continent
Raton
Total
237
672
615
507
358
2,389
195
160
440
115
215
1,125
PlaysUnrisked
Wells
Net RiskedResources
(Bcfe)
45 years of inventory
Note: See cautionary statement on non-SEC proved reserves
76
Onshore Competitive Strengths
Resource play technical expertise
Proven ability to execute large programs
Existing inventory of repeatable opportunities
Concentrated positions with high working interest
Ability to apply technology for improved efficiency
77
Raton BasinCoal Bed Methane
Net acres: 605,000 2007 capital: $115 MM 2007 gross wells: 178 Average gross well statistics:
WI: 100% Capex: $0.5 MM$0.7 MM Reserves: 0.3 Bcfe0.9 Bcfe Rate: 100 Mcf/d175 Mcf/d
NM
CO
Vermejo Park Ranch
EPEP minerals
78
Net acres: 172,000 2007 capital: $52 MM 2007 gross wells: 145 Average gross well statistics:
WI: 74% Capex: $0.4 MM$0.5 MM Reserves: 0.2 Bcfe0.6 Bcfe Rate: 100 Mcf/d300 Mcf/d
Black Warrior BasinCoalbed Methane
Tuscaloosa
Jefferson
AL
Blue Creek West
Short Creek
Brookwood
EPEP lease
White Oak Creek
79
Illinois BasinNew Albany Shale
Net acres: 118,000 Average gross well stats:
WI: 47% Capex: $1 MM Gross production > 2 MMcf/d
from 14 wells 2007 Focus
Expand core producing area Additional new area tests Productivity enhancement
Pike
IN
DuboisEPEP lease
Martin
Knox
Daviess
80
Gulf of Mexico (GOM)/South Louisiana (SLA)
81
GOM/SLA Position
TX LAMS AL
Key Statistics
Production: 174 MMcfe/dReserves: 272 BcfeNet acres SLA: 34,000Net acres GOM: 688,000Total net acres: 722,000Decline rate: 40%50%R/P: 4.3
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