GE Oil & Gas · GE Oil & Gas Claudi Santiago ... Nuovo Pignone Acquisition $1.3 '94 Oil & Gas...
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GE Oil & Gas Claudi Santiago President & CEO This document contains "forward-looking statements" - that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties which could adversely or positively affect our future results include: the behavior of financial markets, including fluctuations in interest rates and commodity prices; strategic actions, including dispositions; future integration of acquired businesses; future financial performance of major industries which we serve, including, without limitation, the air and rail transportation, energy generation, media, real estate and healthcare industries; unanticipated loss development in our insurance businesses; and numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive and regulatory nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.
Transcript of GE Oil & Gas · GE Oil & Gas Claudi Santiago ... Nuovo Pignone Acquisition $1.3 '94 Oil & Gas...
GEOil & Gas
Claudi SantiagoPresident & CEO
This document contains "forward-looking statements" - that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties which could adversely or positively affect our future results include: the behavior of financial markets, including fluctuations in interest rates and commodity prices; strategic actions, including dispositions; future integration of acquired businesses; future financial performance of major industries which we serve, including, without limitation, the air and rail transportation, energy generation, media, real estate and healthcare industries; unanticipated loss development in our insurance businesses; and numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive and regulatory nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.
1 /GE Confidential and Proprietary Information /
May 10, 2006
Oil & Gas Industry
Off-shore Platform
LNG … Liquefied Natural Gas
Compression Trains
Pipelines … “iPigs”
Refinery
2 /GE Confidential and Proprietary Information /
May 10, 2006
Building a Growth Platform
Nuovo Pignone
Acquisition
$1.3
'94
Oil & GasIndustry
Focus
$1.7
'00
GlobalizedFootprint
$2.7
'02
$2.2
'01
Created aTechnologyAdvantage
'97
Developeda Service
Model
$1.5
'03
AdjacentSegment
Entry
$3.1
'04
CoreOrganic
Expansion
$3.6
‘05
BecamePart of
GE Infra-structure
$4.2
($B orders)
3 /GE Confidential and Proprietary Information /
May 10, 2006
Service evolution
65%35%
‘06~$5.0
($B orders)
10%
‘97
$1.5
90%Units
Service
4 /GE Confidential and Proprietary Information /
May 10, 2006
Global presence
15%RoW
20%USA
25%Europe+
~$5.0
40%ME&A
19%36%
32%
$3.6
13%
$1.7
27% 16%
12%45%
Europe+
‘06‘04‘00
($B Orders)
RoW
ME&A USA
5 /GE Confidential and Proprietary Information /
May 10, 2006
Oil & Gas part of GE Infrastructure … for Good Reasons
• Technology … Aviation + Heavy Duty Gas Turbines
• Fulfillment … Lean + Engineering & Manufacturing expertise
• World-Class Testing Capabilities… Full load / full speed string test
• Global Footprint … 130 Service shops combining Energy + Aviation + Oil & Gas
• Talent … global recruiting + GE’s training
6 /GE Confidential and Proprietary Information /
May 10, 2006
Oil & Gas demand and supply challenge
• Depletion rates accelerating … creating new challenges
• New reservoirs in difficult areas … increasing project complexity
• Advanced technologies needed to meet world demand
Supply ChallengeOil & Gas Demand
0
50
100
150
200
250
2000 2010 2020 2030
Mboe / d
Oil
Gas
Mboe / d
100
150
250
2000 2010 2020 2030
50
0
Existing Reserves
RequiredNew Production
200
7 /GE Confidential and Proprietary Information /
May 10, 2006
Oil & Gas regional supply & demand imbalance
139
N America
23
1-2%35
2-3%11
27
ME & Africa
37
12
2314
Eastern Europe
31
3-5%2-4%
1-2%
1-2%
3-4%
3-5%
3-4%1-3%
1-2%
4-5%
Asia Pacific
13
L America
(Mboe / d)
Total World Demand
(CAGR% ’04-’15)
‘04 ‘15
146146
128128
1%
81
91
47
551%
1%
Gas
Oil
’04 Supply – Demand by Regions(Mboe / d)
(CAGR% ’04-’15)
Required New Supply(’04 – ’15)
LNG
Pipelines
16%
55%
3% - GTL
26%Local
ConsumptionSupply
Demand
Western Europe
Supply > Demand
Source: CERA, EIA, IEA, BP
8 /GE Confidential and Proprietary Information /
May 10, 2006
‘05 – ‘15 Segment Indicators
Source: SSB, EIA, Lehman
Oil & Gas industry … very attractive for GE
• E&P capex +30% … offshore and deepwater• Floating production fleet 2X … + 275 vessels• Depletion Rates > 6%
• LNG demand 2X … ~50 new trains• LNG from 6% to 10% of world gas consumption• Gas pipelines +25% … ~0.4M miles
• Refining production +20% … 82 to 100Mb/d• Ethylene capacity +45% … 30+ new plants • GTL to satisfy 1.2% of gas consumption
60
60
‘15
355
235
Transportation
Processing
‘05
45
265
170
50
Exploration &Production
($B)
9 /GE Confidential and Proprietary Information /
May 10, 2006
Infrastructure Synergies … Creating Customer Value
• LNG Projects … proven gas turbine technology with world-class compression
• Re-injection … CFD tools & expertise for highest pressure ever
• Pipelines … Aeroderivative machines driving high efficiency compressors
• Project & Equipment Financing … Working as partners with GE Capital
• CSA … Aviation life extension programs applied to Oil & Gas turbomachinery
Multiple Ways to Grow
10 /GE Confidential and Proprietary Information /
May 10, 2006
Serving the installed base
• 30+ Countries
• 1,400 Units
• Injecting technology to drive productivity
Recip.Comp.
Cent.Pumps
Cent.Comp.Turbo-
expandersGas
TurbinesS & V
Comp.Steam
Turbines
9,400
8,000
3,000
2,000
1,700
1,600
700
$1.4
‘04
$2.0
’05
$0.2
‘00
AAGR 53%($B)
• Invest in technology to serve unpiggable pipelines
• First generation launched summer ‘05
CSA’s Commitments
World Pipelines = 1.7MM Km Pipeline Inspection
# of Operating Units
42%
58%Piggable
Unpiggable
$2.6
’06E
Service Growth … 10x in Past 10 Years
~~
~
~
~
~
~~
11 /GE Confidential and Proprietary Information /
May 10, 2006
GE Oil & Gas Commitment to Technology ($MM)
~AAGR 25%
• LNG Trains… from 4 to 8 MTPY … 10 MTPY
• Sour gas re-injection… from 500 to 820 bar … 1,000 bar
• Compressor efficiency… up 6 pts … another 2 points
• In-line inspection… to un-piggable … robotics
• NOx emissions… from 25 to 15ppm … single digit
$150
$240$300
'00-02 '03-05 '06-08
… Plus access to World’s best R&D programs
~
’01-’03 ’04-’06 ’07-’09
+
12 /GE Confidential and Proprietary Information /
May 10, 2006
300
300
150
1390 1095
180
450
200
450
North America$840 (9.5%)
Western Europe$1450 (16%)
Eastern Europe$930 (10%)
China $390 (4.4%)
Asia$900 (10%)
AIM$3585 (40%)Latin America
$915 (10%)
500
195
790
100
80
120
340
130
~3.3 B
Exploration & Production
~2.5B
Transportation
~1.7 B
Refinery & Petrochemical
~1.5B
Service + Pipeline Inspection
140
60
310
100
190
50
(%) - % Total Visible Opps
290
Looking @ $9B+ of identified opportunities
490
170
340
100
($MM)
Oil & Gas ’06 Opportunities
13 /GE Confidential and Proprietary Information /
May 10, 2006
Financial overview … Oil & Gas
Revenue
OP
• ’06 revenues over 2.5x ’00 level
• CSA backlog 3x in 3 years
• $9B+ identified opportunities …equipment & services
• Technology investment … over $240MM in last 3 years
• Robust market … multiple ways to grow
($B)
'06E
+15-20%
$0.4
'05
$3.6
+10-15%
