Petroleum briefing
Updated : 07:01
Issued by: | BHP Group Plc
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Date: | 11 November 2019
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To: | London Stock Exchange JSE Limited
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For Release: | Immediately
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Contact: | Helen Ratsey +44 (0) 20 7802 7540
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Petroleum briefing
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UK Listing Authority Submissions
The following document has today been submitted to the National Storage Mechanism and will shortly be available for inspection at: www.morningstar.co.uk/uk/NSM
- Petroleum briefing
The document will also shortly be available via BHP's website: bhp.com
The meeting will be webcast at: https://edge.media-server.com/mmc/p/362g83wf
Further information on BHP can be found at bhp.com.
BHP Group plc Registration number 3196209
LEI 549300C116EOWV835768
Registered in England and Wales
Registered Office: Nova South, 160 Victoria Street
London SW1E 5LB United Kingdom
A member of the BHP Group which is headquartered in Australia
NEWS RELEASE
Release Time | IMMEDIATE |
Date | 11 November 2019 |
Release Number | 21/19 |
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Petroleum briefing
BHP President Operations Petroleum, Geraldine Slattery, today said Petroleum is set to deliver strong returns and contribute significant value for BHP through the 2020s and beyond, built on a foundation of quality assets, and attractive growth options.
Speaking to investors and analysts at a briefing in Sydney, Ms Slattery said Petroleum is a great business with competitive growth potential and is aligned with BHP's strategy of being in the best commodities, with the best assets, enabled by the best culture and capabilities. Petroleum has delivered strong financial performance over many years and this is set to continue.
"In a decarbonising world, deepwater oil and advantaged gas close to established infrastructure can offer competitive returns for decades to come."
Ms Slattery outlined a scenario1 that could potentially:
- Generate robust EBITDA margins of more than 60 per cent and an average Return on Capital Employed of more than 15 per cent over the next decade;
- Deliver average Internal Rates of Return of around 25 per cent for major projects, which are resilient through cycles; and
- Support an average annual volume growth of up to 3 per cent between the 2020 and 2030 financial years.
"Our portfolio of quality assets and pipeline of competitive growth options are expected to generate strong free cash flow and returns through the 2020s and beyond", Ms Slattery said.
Petroleum's growth options currently include Scarborough, Wildling Phase I, Trion and Trinidad & Tobago North. While these remain subject to our strict Capital Allocation Framework, they are well placed to compete with other options in the Group's portfolio.
"Our capabilities in safety, exploration and deepwater operations, coupled with a high-performance culture give us confidence that we can deliver on our plans into the future," Ms Slattery said.
Presentations will be webcast live at https://edge.media-server.com/mmc/p/362g83wf and all materials be available on our website at bhp.com.
A summary of guidance and project details contained in the presentation is included below.
1. Represents an unconstrained scenario based on execution of all unsanctioned projects at current equity interests and does not constitute guidance. Based on Wood Mackenzie's most recent long-term oil and gas price forecasts as follows: Brent oil price assumption (2020-2030 average: US$74.34/bbl, real 2019); Japan LNG DES price assumption (2020-2030 average: US$7.86/MMBtu, real 2019).
Guidance
Asset | FY20e | Medium term | |||
| Production | Unit costs1 | Production | Unit costs1 | |
Conventional Petroleum | 110-116 MMboe | US$10.5-11.5/boe | ~110 MMboe average | ||
Future options
Options | Operator | BHP Ownership | Potential execution timing | Capex BHP share | Tollgate | Potential first production2 | Description |
North West Shelf Other Resource Owner | Woodside | 16.67% | <5 years | >250 | Pre-feasibility | FY26 | Low risk investment opportunity to maximise Karratha Gas Plant value through processing other resource owner gas; benefits through tolling fees, cost recovery and life extension. |
Pyrenees Phase 4 | BHP | 71.43% | <5 years | >250 | Opportunity Assessment | FY22 | Combination of well re-entries and new subsea wells which aim to optimise incremental value using the existing infrastructure. |
Scarborough3 | Woodside | 26.5% | 1 year | 1,400-1,900 | Pre-feasibility | FY24 | Large resource of 13 subsea wells connected to a semisubmersible floating production unit from which gas is exported via pipeline to Pluto LNG facility for onshore processing. |
Atlantis Phase 4 | BP | 44% | <5 years | >250 | Opportunity Assessment | FY24 | Additional development opportunities for infill producing wells. Data obtained from Phase 3 project de-risks further development of multiple hydrocarbon bearing zones. |
Mad Dog Northwest Water Injection | BP | 23.9% | <5 years | >250 | Pre-feasibility | FY24 | Two water injector wells providing water from Mad Dog Phase 2 facility to increase production at existing A Spar facility. |
Mad Dog opportunities | BP | 23.9% | <5 years | >250 | Opportunity Assessment | FY25 | Additional opportunities to increase the Mad Dog Phase 2 production beyond the initial investment scope with new wells tied back to existing facility, results in highly economic opportunities. |
Shenzi Growth opportunities | BHP | 44% | 1 year | <250 | Pre-feasibility | FY23 | Shenzi Subsea Multi-Phase Pumping (SSMPP); Subsea pumping opportunities to increase production rates from existing wells. |
Options | Operator | BHP Ownership | Potential execution timing | Capex BHP share | Tollgate | Potential first production2 | Description |
Wildling Phase 1 | BHP | 44%-72% | 1-2 years | ~500 | Pre-feasibility | FY23 | Two Shenzi North wells tied-back to the Shenzi platform, provides the opportunity to accelerate production and unlock additional recoverable reserves. Phased development accelerates first oil, minimizes appraisal cost and reduces risk. |
Trion | BHP | 60% | 2-3 years | >5,000 | Conceptual | FY25 | Large greenfield development in the deepwater Mexico GoM. Resource uncertainty reduced with recent successful appraisal drilling of 2DEL and 3DEL wells. |
Trinidad & Tobago North | BHP | 70% | <5 years | Under study | Opportunity Assessment | FY27 | Completed successful exploration program on our Northern licenses. Potential material gas play in deepwater Trinidad & Tobago, well positioned to the Atlantic LNG plant onshore Trinidad & Tobago. |
Note: This represents an unconstrained scenario based on execution of all unsanctioned projects at current equity interests and does not constitute guidance.
Exploration
Options | Location | Ownership | Maturity | Earliest first production | Description |
Western GoM | US - Gulf of Mexico | 100% Operator | Frontier | Early 2030s | Acquired a significant acreage position in historically underexplored Western Gulf of Mexico |
Mexico | Mexico - Gulf of Mexico | 60% Operator | Exploration | Late 2020s | Opportunity to tie back prospects to future Trion hub. Included in Trion Minimum Work Program |
T&T Southern Gas (Magellan) | Trinidad & Tobago | 65% Operator | Exploration | Mid 2020s | Discovered gas play in deepwater Trinidad & Tobago |
T&T Southern Deep Potential | Trinidad & Tobago | 65% Operator | Frontier | Late 2020s | Evaluating multiple play types to test deeper potential in deepwater Trinidad & Tobago based on deep oil shows from Le Clerc exploration |
Eastern Canada | Orphan Basin | 100% Operator | Frontier | Early 2030s | Recent bid success for blocks with large liquids resource potential in the offshore Orphan Basin in Eastern Canada |
Significant remaining project potential with unrisked NPV of up to US$14 billion4 | |||||
1. Based on an exchange rate of AUD/USD 0.70. Unit costs are in nominal terms.
2. Potential first production data is an estimate and does not constitute guidance.
3. Based on information provided by operator. Represents BHP's current equity position as 25% in WA-1-R and 50% in
WA-62-R.
4. Exploration unrisked value at BHP prices.
Further information on BHP can be found at: bhp.com
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| Australia and Asia
Tara Dines Tel: +61 3 9609 2222 Mobile: + 61 499 249 005
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BHP Group Limited ABN 49 004 028 077 LEI WZE1WSENV6JSZFK0JC28 Registered in Australia Registered Office: Level 18, 171 Collins Street Melbourne Victoria 3000 Australia Tel +61 1300 55 4757 Fax +61 3 9609 3015 |
| BHP Group plc Registration number 3196209 LEI 549300C116EOWV835768 Registered in England and Wales Registered Office: Nova South, 160 Victoria Street London SW1E 5LB United Kingdom Tel +44 20 7802 4000 Fax +44 20 7802 4111 |
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