TIDMBHP
RNS Number : 8864S
BHP Group PLC
10 November 2019
Issued by: BHP Group Plc
Date: 11 November 2019
To: London Stock Exchange
JSE Limited
For Release: Immediately
Contact: Helen Ratsey +44 (0) 20 7802 7540
------------ ---------------------------------
Petroleum briefing
-----------------------------------------------
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
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 scenario(1) 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 costs(1) Production Unit costs(1)
====================== ============= ================== ================== =============
Conventional Petroleum 110-116 MMboe US$10.5-11.5/boe 110 MMboe average <US$13/boe
---------------------- ------------- ------------------ ------------------ -------------
Future options
Options Operator BHP Potential Capex BHP Tollgate Potential Description
Ownership execution share first
timing (US$m) production(2)
============== ======== ========== ============== ============== =============== ============== ===============
North West Woodside 16.67% <5 years >250 Pre-feasibility FY26 Low risk
Shelf Other investment
Resource Owner opportunity to
maximise
Karratha Gas
Plant value
through
processing
other
resource owner
gas; benefits
through tolling
fees, cost
recovery and
life extension.
-------------- -------- ---------- -------------- -------------- --------------- -------------- ---------------
Pyrenees Phase BHP 71.43% <5 years >250 Opportunity FY22 Combination of
4 Assessment well re-entries
and new subsea
wells which aim
to optimise
incremental
value
using the
existing
infrastructure.
-------------- -------- ---------- -------------- -------------- --------------- -------------- ---------------
Scarborough(3) 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 BP 44% <5 years >250 Opportunity FY24 Additional
4 Assessment development
opportunities
for infill
producing
wells. Data
obtained from
Phase
3 project
de-risks
further
development of
multiple
hydrocarbon
bearing zones.
-------------- -------- ---------- -------------- -------------- --------------- -------------- ---------------
Mad Dog BP 23.9% <5 years >250 Pre-feasibility FY24 Two water
Northwest injector wells
Water providing water
Injection from Mad Dog
Phase 2
facility to
increase
production
at existing A
Spar facility.
-------------- -------- ---------- -------------- -------------- --------------- -------------- ---------------
Mad Dog BP 23.9% <5 years >250 Opportunity FY25 Additional
opportunities Assessment 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 BHP 44% 1 year <250 Pre-feasibility FY23 Shenzi Subsea
opportunities Multi-Phase
Pumping
(SSMPP); Subsea
pumping
opportunities
to increase
production
rates from
existing wells.
-------------- -------- ---------- -------------- -------------- --------------- -------------- ---------------
Options Operator BHP Potential Capex BHP share Tollgate Potential Description
Ownership execution (US$m) first
timing production(2)
============== ======== ========== ============== =============== =============== ============== ==============
Wildling Phase BHP 44%-72% 1-2 years 500 Pre-feasibility FY23 Two Shenzi
1 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 & BHP 70% <5 years Under study Opportunity FY27 Completed
Tobago North Assessment 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 Description
production
===================== ====================== ============ =========== ===================== =====================
Western GoM US - Gulf of Mexico 100% Frontier Early 2030s Acquired a
Operator significant acreage
position in
historically
underexplored Western
Gulf of Mexico
--------------------- ---------------------- ------------ ----------- --------------------- ---------------------
Mexico Mexico - Gulf of 60% Operator Exploration Late 2020s Opportunity to tie
Mexico back prospects to
future Trion hub.
Included in Trion
Minimum Work Program
--------------------- ---------------------- ------------ ----------- --------------------- ---------------------
T&T Southern Gas Trinidad & Tobago 65% Exploration Mid 2020s Discovered gas play
(Magellan) Operator in deepwater Trinidad
& Tobago
--------------------- ---------------------- ------------ ----------- --------------------- ---------------------
T&T Southern Deep Trinidad & Tobago 65% Frontier Late 2020s Evaluating multiple
Potential Operator play types to test
deeper potential in
deepwater Trinidad &
Tobago based
on deep oil shows
from Le Clerc
exploration
--------------------- ---------------------- ------------ ----------- --------------------- ---------------------
Eastern Canada Orphan Basin 100% Frontier Early 2030s Recent bid success
Operator 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 billion(4)
======================================================================================================================
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
Media Relations Investor Relations
Email: media.relations@bhp.com Email: investor.relations@bhp.com
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Tel: +1 713 961 8283 Mobile: Tel: +1 713 235 8902 Mobile:
+1 713 299 5342 +1 346 234 8483
BHP Group Limited ABN 49 004 BHP Group plc Registration
028 077 number 3196209
LEI WZE1WSENV6JSZFK0JC28 LEI 549300C116EOWV835768
Registered in Australia Registered in England and Wales
Registered Office: Level 18, Registered Office: Nova South,
171 Collins Street 160 Victoria Street
Melbourne Victoria 3000 Australia London SW1E 5LB United Kingdom
Tel +61 1300 55 4757 Fax +61 Tel +44 20 7802 4000 Fax +44
3 9609 3015 20 7802 4111
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END
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