2013 - 2016 Strategy Presentation


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2013 - 2016 Strategy Presentation

  1. 1. eni.com2013-2016 Strategy14 March 2013
  2. 2. 2the new eni: ideally positioned to deliver growth and returnsExceptional growth opportunities production to reach ~2.5m boe/d by 2022 returns supported by low costs of new giant projectse&pPositioning business for sustainable profitability aligning supply with European hub pricing focus on sales and trading integration and premium sales segmentsg&pRestructuring to positive contribution continuous focus on efficiencies profit enhancement through integration, innovation and portfoliorefocusingr&mchemicalsTransformed balance sheet €19bn financial improvement from divestments achieved in 2012 continuing pragmatic approach to capital managementcapitalallocation
  3. 3. 3E&P capital employed by regionthe new eni: more e&p...% capital employed in E&Pincreasing exposure tohigher-returns activitiesmanaging risk throughdiversification48%54%61%2011 2012 20162012 2016OthersFSUN AfricaSub-SaharanOECD + Far East
  4. 4. 4... a business with a transformed opportunity set...re-loaded growth opportunitiesPer year Cumulative Cumulativeproductionbln boe~7.52008-2012: extraordinaryexploration success discovered over twice thebarrels produced excluding Mozambique trackrecord of ca. 1bln/yr revolutionised resource base time to market: within 8 yearsfor 90% of new discoveriesExploration performanceMozambique0123456782008 2009 2010 2011 2012 2008-123.2
  5. 5. 51,701... converted into superior, organic production growth...2012-2016: >4% production CAGRhigh visibility and deliverability: 90% of production post-FID by YE2013 80% from conventional projects,onshore and shallow water2016-2022: >3% production CAGRvisible project pipeline from: Further phases of development ofgiant projects Recent exploration successCAGRde-risked and deliverable growth2012 2016 2022Production growthKboe/d>3%>4%Price scenario: 90$bbl 2013-2016 +2%/year afterwards
  6. 6. 6resilientreturns..with robust returnsExplorationCapexOpexNew production to 2016 costs<30$/boeRoyaltiesand taxesWell-positioned on the costcurve industry-leading explorationcosts contained development costs focus on synergic giantprojects onshore/shallow waterexposure key position in Africa$/boelow costs of new production
  7. 7. 7g&p: demand and pricing put pressure on margins2012 EBITDA proforma adjdifficult environment through to 20141.3Semi Regulated& International transportLNGRetailNormalization for one offsWholesale and powergenbln €2009 2011 2012 20132008 2010€ per1000m3Proxy European import priceDeteriorating market environmentEU 27demand(bcm)-550-450300 -0 -
  8. 8. 8g&p strategy: positioning for sustainable profitabilitySemiregulated &internationaltransportRetail andcommercialWholesale,power &tradingLNG Total~1.5 stableearnings increasenumber ofclients to14m supplyrenegotiation added valuecommercialproducts leverage tradingintegration synergies withe&p developmentEBITDA proforma adj. 2016bln €
  9. 9. 9r&m: continuous improvementEBIT adj>€500mimprovementat 2012scenarioscenario2011 20122016Efficiency andoptimisationEfficiency andoptimisationbreakeven in2014 at 2012scenario On track with 2012-2015efficiency and enhancementprogramme: 2012-2015 target: €550m 2012 achievement: ~€150mof repeatable efficiencies New target >€500m of ebitenhancement to 2016 €400m from completion ofprevious plan Additional benefit from Venicegreen refinerybln €
  10. 10. 10versalis: more aggressive turnaround planFurther rationalisation andintegration Reduction of ethyleneexposure, also through thereconversion of critical sites Energy, logistics andpersonnel savingsRefocusing to high valuesegments and growingmarkets >60% growth in elastomerproduction Focus on green chemicals Signed JVs in Asia withHonam and PetronasEBIT adj. at constant scenario2012 2016breakeven~€500 mln of EBIT at 2012 scenario2017-18EBIT (including pro-forma JVs)bln €Rationalization and integration Refocusing
  11. 11. eni.comExploration & ProductionClaudio Descalzi
  12. 12. 12main actions accelerating conversion focus on rapid time-to-marketConvert efficientlyresources into production strong growth targets diversified, synergic and low-risk portfolio efficient cost position strong project returns over timeDeliver on developmentproject pipeline continuously rejuvenating acreage high-materiality initiativesPursue further upside fromexplorationEnsure efficiency, deliver robustreturns sustainability and continuous improvement of HSE access to energy, health and educationLeverage distinctive approach
  13. 13. 13the eni modelOperational Results SustainabilityTRIR*Zero blow-outsBlow-out frequency(per thousand)avg drilled operatedwells per yeareni model of sustainability: access to energy: power projects in Nigeria,Congo, Mozambique Agriculture and local development: programsin Nigeria, Congo, Angola Health and educational projectsZero flaring target*n. of TRI/Mln of worked hours293 307 3200 0 02005-09 2010-11 20121,820,912007-11 2012 03060015302007 2008 2009 2010 2011 2012flared gas (Mscm/d)flared gas/total production (toe/ktoe)Mscm/d
  14. 14. 14transformed resource base...bln boebrent($/boe)1112P P3 & Contingent2008 2011 201234.532.1111+7,5%Risked exp2012 - P3 & Contingentonshoreshallow waterdeepwaterarctic+25%North Africa & ME SS AfricaEurope America29.5+9%+35%56Total resourcesRussia & CentralAsiaFar East &Pacific
  15. 15. 15... efficiently converted into reserves and productionTime-To-Market*90% discovered resourceswith start up in <8 yearsReserve Replacementaverage organic RRR >130%in the next 4 years<4 years 5-8 years >8 years*2008-2012 discoveries Major 2013-2014 FIDs 15/06 East Hub - Angola Yaro-Yakhinskoye - Russia Urengoyskoye ph.2 - Russia Jangkrik Complex - Indonesia Mamba initial developments –Mozambique Skrugard / Havis - Norway OPL 245 - Nigeria Kutei Basin - Indonesia Val D’Agri ph.2 - Italy
  16. 16. 16strong growth targets2012 2016 2022Production growthBrent ($/boe)2013/2016 202290 +2%/year>4%cagr>3%Kboe/dproducing fields new projects
  17. 17. 17our development pipeline: diversified and synergic…2013-2014 2015-2016 Beyond 2016North Africa MLE Wafa Compression El Merk Bahr Essalam ph.2 CAFC oilFar East Kutei Basin Jangkrik complexKazakhstan Kashagan EP Kashagan furtherphases Karachaganak ph.3Venezuela Perla EP Junin 5 EP CBM FFOthers Jasmine Hadrian South Val D’Agri ph.2 Hadrian West Junin 5 FF Perla FFNorway Barents  Goliat  Asgard & Mikkel  Skrugard/HavisYamal - Russia Yaro-Yakhinskoye Urengoyskoye ph.1 Urengoyskoye ph.2  Yevo-SeveroSub-Saharan ALNG Abo ph.3 15/06 West Hub 15/06 East Hub OPL 245 ph.1 Kizomba sat. ph.2 Litchendjili Mafumeira Sul Mozambique Brass LNG Sankofa OPL 245 ph.2 Congo – Nené40mainprojects> 700 kboed new production at 2016 CAFC gas
  18. 18. 18… leading to a balanced and robust profileProduction by operatorSS Africa North Africa & MEEurope Russia/Caspian AreaAmerica Asia Pacificequityproductionequityproductionequityproduction2012 2016 2022 2012 2016 2022 2012 2016 2022onshoreshallow waterdeepwateroperatednon operatedProduction by region Production by type
  19. 19. 19key growth drivers to 2016project country op equity production at 2016 physical progressMLE Algeria  15Kashagan EP Kazakhstan  60ALNG Angola 25CAFC Gas Algeria  5El Merk Algeria 15Abo ph 3 Nigeria  10Jasmine UK 20Junin EP* Venezuela  30Goliat Norvegia  50Wafa Compression Libya  6015/06 West Hub Angola  25Perla EP Venezuela  20Hadrian South USA 15Urengoyskoye Russian Federation  45Yaro-Yakhinskoye Russian Federation  50Other cumulative projects Various NA >60start up~180kboe/d~265kboe/d2013201415 major projects worth 60% of new production at 2016Start-ups 2013-14*anticipated early production**progress to KCPFID 2013NA12%15%27%28%47%54%~100%99,9%**>90%72%<10%96%>90%>80%
  20. 20. 20key 2013 start-ups: development on track MLE started in January, ramping up together withCAFC early gas El Merk started up in March onshore plant: commissioned with sweet gas andfuel A-island: ready for production by march D-island: achieved mechanical completion of train 1 June: start up of production in line withcommitmentsAlgeriaKashagan ep
  21. 21. 21Kashagan EP – Bolashak onshore facilities
  22. 22. 22key 2014 start-ups: development on track Urengoyskoye ph.1: drilling activities progressing ongoing construction of facilities Yaro Yakhinskoye: 2 drilling rigs in operation civil works for drilling pad ongoing progress 54% drilling activities progressing in line with plan completed installation of subsea production systemsand flowlines FPSO sailaway planned in 1Q 14Yamal developmentsGoliat
  23. 23. 23key 2014 start-ups: development on track drilling to start in June 2013 FPSO is expected to arrive in Angola in early 2014 fabrication of christmas trees in progress Junin 5 EP achieved start up of anticipated early production Perla EP awarded contract for offshore platforms and flowlines onshore construction of processing facility to start inMarchAngola 15/06 west hubVenezuela
  24. 24. 24further growth drivers to 2016major projects on trackProject Country Op FID ~ equity production at 2016CAFC Oil Algeria   10Litchendjili Gas Congo   10Asgard Mikkel Norway  10Mafumeira Sul Angola   10Kizomba Sat. Ph.2 Angola  10Urengoskoye Ph.2 Russia  2013 25Jangkrik Complex Indonesia  2013 2515/06 East Hub Angola  2013 15Bahr Essalam ph.2 Libya  2014 15OPL 245 ph.1 Nigeria  2014 10Hadrian West USA 2014 10Other cumulative projects Various NA NA >50Start-ups 2015-16150kboe/d
  25. 25. 25long-term growth drivers: MozambiqueArea 4Area 110 kmMamba S-1Coral -1Mamba S-2Mamba NE-1Mamba NE-2Mamba N-1Coral - 3eni discoveriesCoral-2Exploration programmeDevelopment programme 8 wells drilled so far 75 Tcf GIIP discovered 27 Tcf fully contained in area 4 2013 drilling program 1 appraisal + 1 exploration wells straddling resources HOA signed with Anadarko Initial development of 2+2 LNG trains of 5 MTPA Concept Selection in 2013, FID in 2014 non straddling resources Ongoing studies to select best developmentoptions
  26. 26. 26long-term growth drivers: Barents Sea and Indonesia high potential oil hub in OECD skrugard-havis single development project, leveraging synergies to maximizevalue 500 Mboe recoverable resources (100%) start up within 2018 ~200 kboed equity production at 2022 multiple material gas projects accessing high LNG prices:Jangkrik, IDD, Jau FID in 2013-14 start-ups within 2016 > 100 kboed equity production at 2022Barents Sea & NorwayIndonesiaWD@FPU120mWD@Subsea500mProduction FlowlinesUmbilicalsJangkrik Barge FPUCondensate ExportGas ExportJangkrik Jangkrik NEGas & CondensatesExport to shore
  27. 27. 27assets for future explorationconfirmed target of 1 Bboe discoveries/yr, UEC 2$Russia & BarentsFar EastEast AfricaWest AfricaEast Europe>80 000 km2New acreage 2012West Africa Pre-salt play NearfieldArctic Norwegian & Russian Barents SeaRussian black SeaCyprus Levantine BasinPacific Gas Vietnam Indonesia AustraliaPakistan nearfieldEast Africa Rovuma Basin further potential Kenya Ultra Deep WaterNorth Africa Egypt TunisiaGoMChina Unconventional Sichuan Basin
  28. 28. 28investment plandev exp otherbln €44.847.2Production optimizationProjects with productionwithin 2016Projects with productionbeyond 2016Developmentfrontierproven basinsNear fieldExploration37,639,95,55,51,71,82012-15 2013-16+5.5%
  29. 29. 29increasing efficiency** XOM, CVX, COP, BP, RDS, TOT, eni. Company data and Wood MackenzieF&DOpex$/boe$/boe5. 09-11 10-12 13-16EBenchmark group** eni0102030405005-07 06-08 07-09 08-10 09-11 10-12 13-16EDiscovery cost Development cost F&D cost
  30. 30. 30robust returnscashflowsUnit cashflows +15% excluding scenario effects Increasing proportion of oil vs gas Limited increase of unit cash costs on planning horizonprojectreturnsIRR around 20% on new projects at 90$/bbl Contained unit capex through giant synergic developments Quick payback through timely project deliveryBEP confirmed at 45 $/bblDecrease in inactive capital from 30% to 20% Prudent approach to project phasingstrong value creation
  31. 31. 31main actions RRR of >130% Rapid time to market of new discoveriesEfficiently convertresources into production >4% CAGR to 2016 >3% CAGR to 2022 Unit cashflow growth IRR of new projects around 20%Deliver on developmentproject pipeline 1bn boe a year of new discoveries UEC of $2Pursue further upside fromexplorationEnsure efficiency, deliver robustreturns Continuous improvement in HSELeverage distinctive approach
  32. 32. eni.comGas & PowerMarco Alverà
  33. 33. 33the deteriorating near-term environment…Declining Italian pricingPSVPremiumtoTTF€/kcm2013 PSV ContractDifferential010203040506070gen-12 apr-12 lug-12 ott-12TTF – PSV Transport Cost Italian hub prices rapidlyconverging with Europeanhubs Deteriorating commercialenvironment Power demand downIncreasedmarginpressure in2013-14
  34. 34. 34… requires an accelerated supply responseLong term gas supplybcm Price Level ~100% hub level – transport costs Increased flexibility Take or pay volumesaligning supply prices with hubs minus costsGazpromSonatrachGasTerraStatoilLibyaEquity &OtherSupply>80%Targets
  35. 35. 35… and integration and innovation in wholesale, trading and lngreturning wholesale to profitability and leveraging integrationLNGIndustrials &Wholesale Expertise ininnovative offeringstructure Leverage reloadingopportunities Synergies with E&PdevelopmentAsset backedtrading & power Leverage on thevolatility of gas, oiland power pricesto extract valuefrom flexible G&Passets Multi-country offersproposed to smallerclients Flexible andinnovative contracts Contractperformance tools Web solutions New products2016PROFORMAEBITDA
  36. 36. 36 Solid and reliable counterparty Portfolio flexibility and tradingcapability Innovative product offering forindustry Access to pipe, storage and LNGinfrastructure ~20% market share in Europefurther upside from market recoveryadditional upside potential Production decline Nuclear and old powerplant phase-out CO2 price increase Gas for transport Economic upturnImpact Increased value offlexibility Enhanced tradingopportunities Potential volume benefitGas market recovery
  37. 37. eni.comFinancial StrategyMassimo Mondazzi
  38. 38. 3800,10,20,30,40,52007 2008 2009 2010 2011 2012 2013 2014 2015 2016consolidated financial structure Target leverage range 10-30% Coherent with new business profile Stronger liquidity position: ca. 2 years of financial independenceLeveragetarget rangeLeverage = Net Debt / Equity
  39. 39. 39growth strategy fuelled by broadly stable investments…53.856.82012-15capex planforex effect e&p others 2013-16capex plane&p g&p r&m saipem chemical OthersMainly: Mozambique Indonesia NigeriaMainly: e&c +0.4 chemicals +0.4 g&p - 0.2 r&m - 0.4bln €E&PE&PInvestmentsfocused on E&PE&P: more than 83% ofcapex plan….… and 90% ofdiscretionary capex1.41.10.5** Excluding Snamchemicals
  40. 40. 40...selective and focused on high-return opportunities...R&M2.4 bln €G&P1.2 bln €Chemicals G&P: selective plan - power upgrades; stable transport & distribution business R&M: resilient projects - Venice conversion Versalis: turnaround plan - increasing elastomers , green chemicals, efficiencySemi-regulatedand internationaltransportNewinitiativesMarketPowerMarketingRefining2 bln €Stay inbusinessEfficiency
  41. 41. 41capex more than fully funded by strong cashflow growthSensitivity Cash Flow @110$/bbl2013-16 Cash FlowFCF@ 90$/bblFCFupsideAvg capexdisposalsCFFO Robust organiccash flow Disposal plan>€10bn Snam Galp Other assets Further upsidefrom price scenarioStrong freecash flow
  42. 42. eni.comClosing remarksPaolo Scaroni
  43. 43. 43shareholder distribution policyProgressive dividend New buyback programme1 2Dividend rising in line withOECD inflation2010-2012 policyNew policyThe new eni
  44. 44. 441shareholder distribution policya growing, reliable income streamA progressive dividend policyBased on: The board’s view of Eni’s underlyinggrowth and value creation prospects E&P production levels G&P contract negotiations Downstream refocusing, efficiency Our plan scenario $90/bbl Brent Gradual recovery in European markets2013 dividendincreased to €1.10per share(~2% vs 2012)
  45. 45. 45shareholder distribution policy2A flexible buyback programmeActivated when, on a through-cycle basis: Leverage is satisfactory, and in anycase well within our 30% ceiling Growth opportunities in the businessare funded Dividend payments are coveredflexible upside from higher oil prices€6 bln overallauthorisation
  46. 46. 46the new eni: ideally positioned to deliver growth and returnsExceptional growth opportunities production to reach ~2.5m boe/d by 2022 returns supported by low costs of new giant projectse&pPositioning business for sustainable profitability aligning supply with European hub pricing focus on sales and trading integration and premium sales segmentsg&pRestructuring to positive contribution continuous focus on efficiencies profit enhancement through integration, innovation and portfoliorefocusingr&mchemicalsTransformed balance sheet €19bn financial improvement from divestments achieved in 2012 continuing pragmatic approach to capital managementcapitalallocation