Eni Upstream Trend
October 3, 2003
Stefano CaoChief Operating Officer
E&P Division
2
Production trend
Portfolio
Capital investment
Technology
Efficiency
3
1998 2001 2002 Target2006
Strong Production Growth*
* Net of portfolio rationalization
(kboe/d)
1,038
1,3691,472
Above1,800
CAGR 9.7%7.5%
~ 6%inclusive of
Fortum
4
Maintaining a Strong Production Growth(kboe/d)
3Q 02 3Q 03E
1,540E1,451
Jan-Sep 02 Jan-Sep 03E
1,530E1,453
>6.0% ~5.4%
5
Selectivity and Operatorship
2 3
96
10
6
104
7
1998 2002 2006
>100 30 ÷ 100 30<
N° of producing countries(kboe/d)
1998 2002 2006
Gross Equity
Operated production(kboe/d)
15
23
(kboe/d)
19 >70%of totalequity
1,511
780
2,100
900
3,100
1,300
6
146 141 137
177
226202
100
150
200
250
300
Production Growth with Strong Reserves Replacement
3017
32
29
17
18
13
12
824
Reserves Replacement Ratio
Italy
North Africa
West Africa
North Sea
Rest of World
Italy
North Africa
West Africa
North Sea
Pro
du
ctio
n(%
)R
ese
rves
(%)
3821
23
24
19
16
15
21
18
5
1998 2002
(organic)
(all sources)
%
11.5
9.8
5.3
0
5
10
15
98-00 99-01 00-02
Production growth
%
Rest of World
7
44%61%74%
45%37%
26%
11%
1998 2002 2006
Production by Type of Contract
kboe/d
1,038
1,472
>1,800
Others(buy back, service)
PSA
Concession
8
64% oldproduction
73% oldproduction
27% newproduction
36% newproduction
1998 2002 2006
! Fortum(2003)
Good Level of Production Renewal
>1,800
1,038
1,472
CorporateAcquisition
Producingfields and
rationalization
Producingfields and
rationalization
CorporateAcquisiton
New production
New production
Main fields
! Abo (2003)! Wafa (2004)! South Pars (2004)! Kizomba A(2004) ! Bonga (2004)! NC41 (2005)
Main fields
! Elgin/Franklin! Asgard! Temsah! Villano! Hapy! Baltim! Clara complex! Kuito
! British Borneo (2000)! Lasmo (2001)
(kboe/d)
9
Production trend
Portfolio
Capital investment
Technology
Efficiency
10
Maximize synergies
Leverage participation leveland operatorship
Capture growth potential
Focus on strategic value
Selectivity based on strict financial discipline
Enhance
the value of
E&P Portfolio
11
Portfolio Rationalization:actions delivered and in progress
Ecuador100% Villano
ItalySPI company
GabonEni assets
U.K.19 commercial fields and
marginal discoveries
All disposed All disposed NPV
Italy25% in Tempa Rossa
Delivered In progress
Qatar45% stake in Alkhalij
12
MIKKELMIKKEL
BRAGEBRAGE
GOLIATHGOLIATH
HEIDRUNHEIDRUN
ASGARDASGARD
Gas44%
Liquids56%
Eni 20.4%
ExxonMobil20.4%
Inpex8.3%
ConocoPhillips10.2%
Shell20.4%
Total20.4%
KAIRAN
AKTOTE
KALAMKAS
KASHAGAN
Strengthening of Portfolio Assets
Kashagan
! May 2003: preemption* of BG interest (16.67%), Eni + 3.71%
Fortum
Reserves = 200 M Boe
Heidrun21%
Brage3%
Mikkel6% Goliath
4%
Asgard66%
! 76% of acquired reserves in already participated assets
* Pending completion
13
Production trend
Portfolio
Capital investment
Technology
Efficiency
14
Regional distribution
15.6 Bln euro*(defined projects only)
2003-2006 Capital Investment
Activity distribution
North Sea14%
West Africa21%
Italy11%Americas
10% North Africa23%Central
Asia11%
Others10%
Exploration14%
Development*86%
*Inclusive of Fortum acquisition
15
2003-2006 Exploration Features
Main areas of activity
U.S.A.
VENEZUELA
BRAZIL
ANGOLACONGO
NIGERIA
EGYPT
AUSTRALIAINDONESIA
KAZAKHSTANITALY
U.K.
NORWAY
RUSSIA
Onshore24%
Conventional 28%
Deep14%
Ultradeep34%
O f f s h o r e
MatureExploration
31%
FrontierExploration
31%
Focus Area
38%
16
2002 and 2003 Main Exploration Successes
KazakhstanKalamkas (20.4% Op.)Kashagan E3 (A) (20.4% Op.)Kashagan E4-E5 (A) (20.4% Op.)
AngolaGabela (bl.14) (20%)Reco Reco (bl.15) (20%)Clochas (bl.15) (20%)
MauritaniaChinguetti (Banda) (35%)
U.S.A.Timon K2 (A) (18.2% Op.)Champlain (A) (37.5%)
TunisiaBaraka (100% Op.)
ItalyPanda (37.5% Op.)
NigeriaBonga SW (A) (12.5%)
VenezuelaCorocoro (A) (40%)
EgyptTennin (50% Op.) Indonesia
Rangas (20%)Gandang (A) (20%)Gehem (20%)Selatan (A) (20%)
U.K.West Franklin (21.9%)Farragon (30%)
20022003(A) Appraisal
AlgeriaBlock 404 (25%)
17
2002 and 2003 Start ups and Sanctioned Projects
U.K.Jade
KazakhstanKarachaganak: start up export through CPC to Black Sea
IranDorood;Balal
AlgeriaBlock 208BKNE/RBK; Ourhoud;Rom Est
U.S.A.King Kong/Yosemite
T&TNCMA
PakistanBHIT; Sawan
TunisiaAdam
NorwayEkofisk EAG
KazakhstanKashagan dev. plan submitted
CroatiaAnnamaria/Ika/Ida
AustraliaBayu UndanWollybutt
AngolaKizomba B, Xicombaand Sanha condensate
NigeriaLNG 4&5 train EA; Okono; Abo
VenezuelaCorocoro
Project sanctionedStart up
18
Forthcoming Opportunities
" Angola Landana-Tombua; Kizomba C; Marimba
" Kazakhstan Kashagan (additional stake 3.71%)
" Nigeria LNG upstream: Bonny 6th Train and Brass
" Norway Asgard Q-Template; Tyrihans
19
" Expected monetary value (EMV)
" PV Ratio = EMV/PV capex
" Hydrocarbon reserves" Probability of success " Operatorship/working
interest
Economicdrivers
Technicalmateriality
" Net Present Value" Present Value Ratio (NPV/PV
capex)" AARR" Pay Out Time
DevelopmentExploration
Growth through Capital Discipline
Monitoring
" Production level and capital materiality
" Operatorship" Synergies
Reauthorization when material changes occur:
# NPV# PV Ratio# Capex# First oil
Reauthorization when material changes occur:
# EMV# Capex
20
Production trend
Portfolio
Capital investment
Technology
Efficiency
21
ADVANCED “LEVEL 6” MULTILATERAL DRILLING
Nigeria - Idu
Kazakhstan - Kashagan
HP RAWGAS INJECTION;INNOVATIVE DRILLING
ADVANCED MATERIALS FOR PIPELINE INTEGRITY
Italy – Ragusa
Congo - Kitina
ADVANCED TECHNOLOGY FORPRODUCTION FLOW ASSURANCE
U.K. - Stirling
NEW APPROACHES IN FRACTUREDRESERVOIR EXPLOITATION
Venezuela - Dacion
INNOVATIVE TECHNOLOGYFOR RESERVOIR IMAGING
INNOVATIVE TECHNOLOGIESTO BOOST PRODUCTION
GOM - Allegheny
Libya - Elephant
INNOVATIVE METHOD TOIMPROVE SEISMIC IMAGING
Egypt - EDDM
LEAN PROFILE DRILLING
Leverage to Create Value
22
Production trend
Portfolio
Capital investment
Technology
Efficiency
23
500
650
870Million Euro
Cost Cutting
Target1999-03
Target 1999-05
Target 1999-06
113%of target
99-02
560
G&A
Procurement
Drilling
Synergies
Exploration
Technology
24
98-00 99-01 00-02 98-00 99-01 00-02
5.75.25.3
0
1
2
3
4
5
6
7
8
9
10
98-00 99-01 00-02 98-00 99-01 00-02
3.63.8 3.8
0
1
2
3
4
5
6
98-00 99-01 00-02
F&D costs($/boe)
Focus on Unit Costs
1.41.5
1.7
0
1
2
3
4
5
6
7
8
9
10
98-00 99-01 00-02
18% 18% reductionreduction
Discovery costs($/boe)
* Benchmark Group includes BP, ExxonMobil, Shell, Total, ChevronTexaco, ConocoPhillips, Repsol YPF
Eni Benchmark Group*
Lifting costs($/boe)
2001: Discovery and F&D costs net of Lasmo acquisition2002: F&D costs net of Buy Back (Iran)
25
Conventional
Normalized*
F&D Costs Conventional vs Normalized
Exploration costs + Development costs
Total additional proved reserves
Exploration costs
Total additional proved reserves
Current
Additional proved
developed reserves
+
Development costs
+Future
Remaining proved
undeveloped reserves
(*) Source: J.P. Morgan
26
F&D Costs, Conventionally Calculated and Normalized
Source: JP Morgan
3.6
4.8
5.0
5.2
5.2
5.7
5.7
5.9
3.8
8.6
4.2
4.2
4.5
4.7
6.8
6.9
REPSOL
SHELL
BP
EXXON MOBIL
TOTAL
CHEVRONTEXACO
ENI
CONOCOPHILLIPS
Normalised 3 year Average (00-02) Standard Method 3 Year Average (00-02)
$/boe
27
8.9 9.2 9.7 9.7 10.1 10.4
11.912.7
EniBPChevronTexaco
ExxonMobil
ConocoPhillips
RepsolYPF
TotalShell
2000-2002 Cash Flow($/boe)
Cash Flow = Net Income + Exploration expenses + DD&A
Source: Deutsche Bank
28
Reinvestment Efficiency – R.E.
Cash Flow/boeR.E. =
F&D normalized
Number of new barrels that cash flow
from each barrel produced can add
29
Reinvestment Efficiency(Cash Flow vs F&D Normalized)
BPExxon Mobil
Shell
Chevron TexacoConoco
Phillips Eni
Repsol YPF
Total
3
4
5
6
7
1,0 1,1 1,2 1,3 1,4 1,5 1,6 1,7 1,8 1,9 2,0 2,1 2,2 2,3 2,4 2,5 2,6 2,7 2,8
F&
D n
orm
ali
zed
$/boe
Average 00-02 Cash Flow/boe
F&D normalized
Source: Deutsche Bank, JP Morgan
30
" PRODUCTION" 6% growth
" Operatorship and production renewal
" PORTFOLIO" Enhance the value
" Disposals and acquisitions
" CAPITAL INVESTMENT" Profitability
" Capital discipline
" TECNOLOGY AND EFFICIENCY" To be competitive
" To improve performance
Strategy for Profitable Growth
31
Eni in Kazakhstan
Reserves
Operatorship
Production
Challenges & Skills
Relationship
32
Reserves
Russia
Turkey
GeorgiaAzerbaijan
Armenia Turkmenistan
CaspianSea
Black Sea
AlmatyAstana
Samara
Orenburg
Uralsk
AksaiBolshoiChagan
Atyrau
Kropotkin
Komsomolskaya
CPC
Novorissiysk
Tengiz
Karachaganak2-3 billion boe
North Caspian Sea:$ Kashagan 9-13 billion
boeFurther explorationactivity in:$ Kashagan SW$ Kalamkas$ Aktote and Kairan
Uzbekistan
33
2002 2010E 2015E
Eni a Key Player in Kazakhstan
939
2,000-2,600*
14%30-40 %
40-50 %
2,700-3,800*
(*) Source: Cera, Kazakhstan Ministry of Energy
kboed
Eni Operated Production
34
0
50.000
100.000
150.000
200.000
250.000
300.000
350.000
400.000
450.000
500.000
2.001
2.003
2.005
2.007
2.009
2.011
2.013
2.015
2.017
2.019
2.021
2.023
2.025
2.027
2.029
2.031
2.033
2.035
2.037
BO
E/d
100% Eni share
Karachaganak Production ProfilePhase 2 (2003/2037)
35
Kazakhstan:Project Challenges and Industrial Skills
" Very shallow waters" Harsh environment " Sulphur management
Technical and technological
Environmental
Eni’s project
management
and
engineering
know how
" High reservoir pressure" High H2S content " Raw gas re-injection
36
Eni in Kazakhstan: relationship
" Understand Kazakhstan culture
" Build relationship with Authorities
# Local content
# Know-how transfer
# Social programmes
Leveraging on relationship to sustainlong term growth
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