IOC Challenges: Portfolio / Merger / Acquisitions / Divestments John Knight, EVP Strategy and Business Development Statoil ASA 1 Classification: Internal 21 oktober 2015 Statoil ASA
IOC Strategies in the Global O&G Landscape IOC Challenges: Portfolio / Merger / Acquisitions / Divestments Key issues facing IOCs Statoil context Statoil future direction 2
Key issues facing IOCs Capital efficiency Reserve replacement Business model for unconventionals Climate Upstream / Downstream balance 3
Development costs incurred, USD bn Capital efficiency not low oil price is key issue 200 Peer group development spend vs production 160 2014 2013 2012 120 2011 2008 2009 2010 80 2006 2007 40 2001 2002 2003 2005 2004 0 19.0 19.5 20.0 20.5 21.0 21.5 22.0 22.5 23.0 Production, mmboed Peers (incl. Statoil) 4
Reserve Replacement Comparison of produced & discovered volumes 5 year average (bn boe) 1960 2013 5
Business Models for Unconventionals BP Headlines "BP to split off US onshore oil, gas business" Oil and Gas Journal, 4 March 2014 Shell Headlines "Shell Reshaping Conventional, Unconventional Businesses, Creating Integrated NatGas Unit" Natural Gas Intel, 3 November 2015 6
Climate Nov. 3, 2015: Statoil to build world's first floating wind farm: Hywind, Scotland 7
Upstream / Downstream Balance 8 8
Midstream / Downstream Balance Downstream and Midstream M&A volume (2013-2014) 9
IOC Challenges: Portfolio / Merger / Acquisitions / Divestments Key issues facing IOCs Statoil context Statoil future direction 10
Statoil Context : Value/Volume Autumn 2013: Too much too fast Feb. 2014: Capital intensity / production growth re-set Nov. 2014: OPEC / Saudi oil price decline April 2015: STEP / OE / COO / NES 11
Statoil Context : Financial Flexibility and Growth Financial Flexibility 2010 2015 : $23 billion proceeds/ $12 billion accounting gain / 12 divestments Growth 2010 2015 : Eagle Ford / Marcellus / Bakken/ Snøhvit / Alfa Sentral 12
Statoil Context : 2010-2015 Divestments 5 years of active divestments Oil price curve, main divestments 2010-2014 Delivered ~$12bn profits, $23 bn proceeds Proceeds ($bn), main divestments 2010-2014 Southwestern 0.4.06 Shah Deniz 2.6 3.65 Oil sands Gassled Fuel & Retail IPO Centrica Wintershall Fuel & Retail Shah Deniz OMV Wintershall OMV Wintershall Centrica Gassled 1.7 1.9 1.3 1.4 1.60 2.65 2.75 2.90 Peregrino Shah Deniz Retail 1.0 3.20 Southwestern Oil sands 0.9 2.30 Peregrino 1.5 3.10 2010 2011 2012 2013 2014 Accounting gain Source: Statoil; FactSet 13 *Shah Deniz transaction to close in H1 2015, subject to approval from the relevant authorities
Statoil Context : Neutral free cash flow 3Q 15 14
IOC Strategies in the Global O&G Landscape IOC Challenges: Portfolio / Merger / Acquisitions / Divestments Key issues facing IOCs Statoil context Statoil future direction 15
Breakeven US onshore Time Top 20 Type Curve Areas Oil $29 - $52 WTI Gas $1.8 HH 16
Climate Time horizons : From 2020 targets to 2030 roadmaps GHGs : From CO2 to methane Leadership : Future fit & fluent Renewables / CCS : Scale up O&G portfolio : Sharper GHG choices Collaboration : Engagement with society beyond industry JVs 17
Activities Going Forward Mega-mergers New era post Shell / BG? or using the moment Suncor / CNRL Anadarko / Apache Woodside / Oil Search 18
Activities Going Forward Divestments IOCs generally have a large challenge / big targets Poor upstream markets Choosy midstream buyers Statoil has "tactical tidying up 19
Activities Going Forward Acquisitions "Double down in established areas Exploration Invest through cycle 20
John Knight EVP Statoil ASA www.statoil.com Statoil ASA This presentation, including the contents and arrangement of the contents of each individual page or the collection of the pages, are owned by Statoil. Copyright to all material including, but not limited to, written material, photographs, drawings, images, tables and data remains the property of Statoil. All rights reserved. Any other kind of use, reproduction, translation, adaption, arrangement, any other alteration, distribution or storage of this presentation, in whole or in part, without the prior written permission of Statoil is prohibited. The information contained in this presentation may not be accurate, up to date or applicable to the circumstances of any particular case, despite our efforts. Statoil cannot accept any liability for any inaccuracies or omissions.