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Regulatory Story
Company BHP Group PLC
TIDM BHP
Headline Petroleum briefing
Released 07:00 11-Nov-2019
Number 8864S07

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 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

<US$13/boe

           

 

Future options

 

Options

Operator

BHP

Ownership

Potential execution timing

Capex BHP share
(US$m)

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
(US$m)

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

 

Media Relations

 

Email: media.relations@bhp.com

 

Investor Relations

 

Email: investor.relations@bhp.com

 

 

 

Australia and Asia

 

Gabrielle Notley

Tel: +61 3 9609 3830  Mobile: +61 411 071 715

 

Europe, Middle East and Africa

 

Neil Burrows

Tel: +44 20 7802 7484  Mobile: +44 7786 661 683

 

Americas

 

Judy Dane

Tel: +1 713 961 8283  Mobile: +1 713 299 5342

 

Australia and Asia

 

Tara Dines

Tel: +61 3 9609 2222  Mobile: + 61 499 249 005

 

Europe, Middle East and Africa

 

Elisa Morniroli

Tel: +44 20 7802 7611  Mobile: +44 7825 926 646

 

Americas

 

Cristian Coloma

Tel: +1 713 235 8902  Mobile: +1 346 234 8483

 

 

 

 

 

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

 

 

 

Members of the BHP Group which is

headquartered in Australia

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