BHP Billiton Petroleum
Jefferies Energy Conference
J. Michael Yeager
Chief Executive – BHP Billiton Petroleum
D
December
b 2010
Disclaimer
Reliance on Third Party Information
The views expressed here contain information that has been derived from publicly available sources that have not been
independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the
information. This presentation should not be relied upon as a recommendation or forecast by BHP Billiton.
Forward Looking Statements
This presentation includes forward-looking statements within the meaning of the U.S. Securities Litigation Reform Act of
1995 regarding future events and the future financial performance of BHP Billiton. These forward-looking statements are
not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other
factors, many of which are beyond our control, and which may cause actual results to differ materially from those
expressed
e
p essed in the
t e statements
state e ts co
contained
ta ed in tthis
sp
presentation.
ese tat o For
o more
o e detail
deta on
o those
t ose risks,
s s, you should
s ou d refer
e e to tthe
e
sections of our annual report on Form 20-F for the year ended 30 June 2010 entitled “Risk factors”, “Forward looking
statements” and “Operating and financial review and prospects” filed with the U.S. Securities and Exchange Commission.
No Offer of Securities
Nothing in this release should be construed as either an offer to sell or a solicitation of an offer to buy or sell BHP Billiton
securities in any jurisdiction.
Non-GAAP Financial Information
BHP Billiton results are reported under International Financial Reporting Standards (IFRS). References to Underlying
EBIT and EBITDA exclude any exceptional items. A reconciliation to statutory EBIT is contained within the profit
announcement, available at our website www.bhpbilliton.com.
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 1
Agenda
 BHP Billiton Corporation overview
 Petroleum overview
 Petroleum performance
 Near
N
tterm outlook
tl k
 Longer
g term opportunities
pp
 Summary
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 2
BHP Billiton Corporation
A global upstream portfolio
Petroleum
A 450mbd oil and gas exploration
and production business
Aluminium
#4 global producer of bauxite and #4 aluminium
company based on net third party sales
Base Metals
#3 global producer of copper,
silver and lead
Diamonds & Specialty Products
EKATI Diamond Mine is one of the world’s
largest gem quality diamond producers
Stainless Steel Materials
#3 global nickel producer
Iron Ore
One of the world’s premier suppliers of iron ore
Manganese
Operations produce a combination of ores,
alloys and metal
Metallurgical Coal
Produce and market high quality hard coking
coals for the international steel industry
Energy Coal
One of the world's largest producers and
marketers of export thermal coal
Aluminium
Base Metals
Diamonds & Specialty Products
Energy Coal
Iron Ore
Manganese
Metallurgical Coal
Petroleum
Stainless Steel Materials
Offices
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 3
The power and reach of a super major behind
BHP Billiton Petroleum
Market Capitalisation at 31 October 2010
(US$bn)
350
 BHP Billiton has the
balance sheet to
undertake large and
complex
p
p
projects
j
4th largest company in the world by market capitalization
300
250
– Diversified portfolio
balances risk
200
150
100
JP Morgan Cha
J
ase
Nova
artis
Vale
V
vron
Chev
AT&T Inc
ctric
General Elec
Johnson & Johnson
Procter & Gamble
P
BM
IB
HSBC
stle
Nes
Google
Be
erkshire Hathaway
Mart
Wal-M
Royal Dutch Shell
R
Petrobras
BHP Billiiton
soft
Micros
Apple
Exxon Mobil
50
–L
Long term view
i
with
ih
investment through
the cycles
Source: Bloomberg
Petrochina, Ind & Commercial Bank of China, China Mobile and China Const Bank have been excluded due to high percentage of non free float shares.
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 4
Petroleum is a significant contributor to the
BHP Billiton Group
Underlying EBIT(a)
(FY10 US$ billion)
(FY10,
21
Underlying EBIT margin(a)
(FY10 %)
(FY10,
$19.7B
Metallurgical Coal
18
15
Manganese
Iron Ore
Ferrous
(43.5%)
Metallurgical Coal
34%
M
Manganese
33%
54%
Iron Ore
SSM
20%
12
SSM
D&SP
9
Base Metals
6
Aluminium
Energy Coal
3
Petroleum
$4.6B
38%
D&SP
Non Ferrous
(30.6%)
Aluminium
Energy
(25.9%)
49%
Base Metals
Energy Coal
Petroleum
13%
20%
53%
0
(a) Excludes third party trading.
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 5
Agenda
 BHP Billiton Corporation overview
 Petroleum overview
 Petroleum performance
 Near
N
tterm outlook
tl k
 Longer
g term opportunities
pp
 Summary
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 6
Core Strategy
 Be functionally strong where we compete
 Fundamentals focus – safety, volume, cost
 Take large, operated positions with multiple long life opportunities
 Explore globally
globally, but with an emphasis on proven basins
 Pursue commercial opportunities that fit and add to corporate
diversification
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 7
Large Positions
UK
Algeria
P t l
Petroleum
HQ
Pakistan
Gulf of Mexico
Trinidad
Philippines
Malaysia
Vietnam
Western Australia
Bass Strait
Producing and development
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Exploration – Proven Basins
Slide 8
Very simple organisational model
Global functional organisation
Exploration
Development
Production
Marketing
Safety
Safety
Safety
Revenue per barrel
Resource adds
Development Plans
Volumes
Finding costs
Project Execution
Per barrel costs
Facilities integrity
Global Support Functions
(HSEC, Planning, Human Resources, Finance, Legal, External Affairs and Information Technology)
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 9
Two organisational principles
Excellence
Petroleum Headquarter – Houston
 Centralised management/planning
 Centralised services
 Common worldwide standards
 Functional excellence
Western
Australia
Bass
Strait
Gulf of
Mexico
UK
Trinidad
Pakistan
Algeria
Execution
Strong local operating units
 Execution
 Receive services
 Adhere
Adh
to
t worldwide
ld id standards
t d d
mboed
Employees
Employees/mboed
2007
310
1,350
4.3
2010
450+
1,566
3.4
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 10
Agenda
 BHP Billiton Corporation overview
 Petroleum overview
 Petroleum performance
 Near
N
tterm outlook
tl k
 Longer
g term opportunities
pp
 Summary
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 11
Outstanding performance metrics across
the board
Four years of annual gains ...
 Excellent safety performance
 11% CAGR volume growth since FY2007
 100% reserves replacement FY2007-FY2010
 Low operating cost/boe
 Low depreciation
p
p
per barrel for international independent
p
oil and g
gas
 High quality barrels for top EBIT/boe margin
 Delivering excellent EBIT return on capital employed
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 12
Safety
Continued focus
Total Recordable Incident Frequency Rate (TRIFR)
(Incidents per million hours worked)
5
 2.36 Total Recordable
Incident Rate in FY2010
4
 Follows best ever
Petroleum performance in
FY2009 at 1.9 TRIFR
3
 Part of functional
excellence approach
2
 1 LTI in the last 14 months
1
0
FY2006
FY2007
FY2008
FY2009
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
FY2010
Slide 13
Safety
Lost Time Injury performance
Source: OGP Independent Study 2009
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
BHP Billiton (FF)
Slide 14
Volume history
 Excellent FY2010 result
(mmboe/year)
– Volume up 15% year on year
170
434 mbd
160
11% CAGR
150
 Growth leveraged towards
378 mbd
140
liquids and excellent fiscal
terms
354 mbd
130
– Base production well
managed with > 93%
operated uptime
 Average 11% growth per
120
year since FY2007
318 mbd
 At top of industry
110
performance
100
FY2007
FY2008
FY2009
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
FY2010
Slide 15
Operating cost
3 year average operating cost per boe, FY2008–FY2010
(US$/boe)
15
 Highly competitive unit
operating costs
 Cos
Costs
s co
controlled
o ed in a d
difficult
cu
12
environment
 Significant focus on the
9
fundamentals
– Equipment reliability /
p
uptime
6
– Maintenance / shutdowns
3
– Aviation and marine
logistics
g
0
Anadarko
BHP
Billiton
Devon
Apache
Murphy
Hess
Talisman
Source: Company reports. Data presented on a normalised basis to exclude one-off events and activities that were not considered part of E&P operations.
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 16
Depreciation
Depreciation per boe vs Peer Group, FY2008 - FY2010
(US$/boe)
25
 Competitive depreciation per
boe despite recent higher
cost developments
20
15
Peers
10
BHP Billiton
 Depreciation per boe
remains below US$13 into
FY2011
5
0
FY2008
FY2009
FY2010
Source: Company reports. Data presented on a normalised basis to exclude one-off events and activities that were not considered part of E&P operations.
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 17
Reserve replacement
((net mmboe))
180
172
Production Volume*
150
159
152
Reserves Adds
138
144
130
120
116
120
90
60
30
0
FY2007**
FY2008
FY2009
FY2010
* Restated Production Volumes between Gas & NGLs
**Excludes asset sales.
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 18
EBIT margin
3 year average EBIT per boe, FY2008–FY2010
(US$/boe)
40
 Liquids priced barrels
30
20
– FY2006: 62% of 310 mbd
10
– FY2010: 73% of 434 mbd
0
BHP
Billiton
Murphy
Hess
Apache
Devon
Anadarko Talisman
3 year average EBIT margin, FY2008–FY2010
(% of revenue)
 Combined with low cash and
non-cash costs for excellent
margin
80
60
40
20
0
BHP
Billiton
Apache
Murphy
Devon
Hess
Anadarko Talisman
Source: Company reports. Data presented on a normalised basis to exclude one-off events and activities that were not considered part of E&P operations.
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 19
EBIT return on capital employed
3 year average EROC
(%, FY2008–FY2010)
60
 Efficient capital investment
50
program
40
– Project costs as planned
30
– Outstanding drilling
performance
 All phases of execution
20
h dl d wellll
handled
10
0
BHP
Billiton
Murphy
Hess
Apache
Devon
Talisman
Anadarko
Source: Company reports. Data presented on a normalised basis to exclude one-off events and activities that were not considered part of E&P operations.
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 20
Industry leading drilling performance
Gulf of Mexico deepwater (>2,000 ft water depth) exploration and appraisal wells, 1/2000 – 11/2009
Days per 1,000
1 000 feet of drilling
8
7
6
5
4
3
2
1
24
wells
106
wells
49
wells
44
wells
42
wells
9
wells
11
wells
13
wells
5
wells
BHP
Anadarko
Shell
BP
Chevron
Conoco
ExxonMobil
Hess
Devon
0
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 21
We operate two of the world’s deepest TLPs
Neptune
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Shenzi
Slide 22
Key messages
 Scalable organisation
– Highly functional but low cost organisation
– Add more barrels without overhead growth
 Production growth at 11% CAGR since FY2007
– Projects on time and on budget
– Flawless drilling execution
 Cost control
– Low operation costs
– Focused on the basics
 EBIT return on capital employed leads industry
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 23
Agenda
 BHP Billiton Corporation overview
 Petroleum overview
 Petroleum performance
 Near
N
tterm outlook
tl k
 Longer
g term opportunities
pp
 Summary
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 24
Ongoing Programs and Projects
Oil
Gas
LNG
UK
Liverpool Bay (46.1%)
• Beginning gas blowdown
Pakistan
Zamzama (38.5%)
• Front-end Compression
Gulf of Mexico
North West Shelf (16.67%)
Petroleum HQ
North Rankin B
Atlantis (44.0%)
• New compression platform
• South infill drilling and Water
Injection
CWLH Life Extension
Western Australia
• North development drilling
Shenzi (44.0%)
Trinidad
• Infill drilling
Angostura (45.0%)
• Water Injection project
• Angostura Gas Project
• FPSO replacement
Macedon (71.43%)
• Subsea wells and gas plant
• Infill drilling program – oil
Eastern Australia (50%)
Kipper
• Two well subsea tie-back
Turrum
• New “Marlin B” platform
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 25
Atlantis
2nd largest field in Gulf of Mexico
Oil In Place
 Development drilling expected to re-
?
commence in FY11
 Initial 2 North wells indicate strong
production potential
South
North
 South water injection project in
East
progress
 East appraisal in FY2012
North
East
S th
South
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 26
Shenzi
 Design capacity of 100 mbd
 Initial production 140 mbd
 20 months into production and still
over 90 mbd
 Water
W
injection
i j i project
j
iin progress
and on schedule
 Drilling
D illi off additional
dditi
l up-dip
di wells
ll
North
into new reservoirs to follow
West
East
B101
I5
I-5
I-4
B201
I-1
 BHPB first
fi t to
t resume drilling
d illi iin th
the
GOM under new regulations
I-3
I2
I-2
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 27
Pyrenees
Ownership:
BHPB (Operator)
Apache
Water Depth:
First Oil:
71.43%
28.57%
180-220 m
Feb 2010
 One of Australia’s largest subsea projects
 First BHP Billiton Petroleum FPSO fabricated in China
 Started up in February on schedule and budget
 Ramped up to nameplate capacity (96 mbd) in 11 days
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 28
FY2011 production outlook
(mmboe)
FY2011 outlook
170
 Full year of Pyrenees volume
Moratorium
volume
deferrals
160
150
 Angostura Gas project start-up
start up
 Continued growth impacted by
g moratorium in the Gulf of
drilling
Mexico – high rate wells deferred
140
130
 Volumes projected flat for FY2011
120
110
100
FY2010
FY2011E
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 29
Agenda
 BHP Billiton Corporation overview
 Petroleum overview
 Petroleum performance
 Near
N
tterm outlook
tl k
 Longer
g term opportunities
pp
 Summary
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 30
Summary
Significant resource position for long term growth
Reserves and Resources 3,715 mmboe
(mmboe, as at 30 Jun 2010)
5,000
Gas
4,500
Oil
4,000
Probable Reserves plus
Contingent Resources
2,231 mmboe
Forecast Capital Expenditure for
Browse and Scarborough
(US$bn)
2.5
Browse
Scarborough
Exmouth
NWS
Bass Strait
3,500
3,000
2,500
2.0
1.5
1.0
0.5
2 000
2,000
1,500
Proved Reserves
1,394 mmboe
Atlantis
Mad Dog
Shenzi
Pyrenees
Bass Strait
0.0
FY2011 FY2012 FY2013 FY2014 FY2015
1 000
1,000
500
0
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 31
High impact pre-development projects
Oil
Gas
LNG
Petroleum HQ
Western Australia
Scarborough
Gulf of Mexico
North West Shelf
Thebe
NWS Greater Western Flank
Browse
Gas fields development
M dD
Mad
Dog Ph
Phase 2
New Host facility and
development wells
Atlantis North Phase 2B
Additional subsea manifold
and development wells
Eastern Australia (50%)
Bass Strait Longford
Knotty Head
Gas conditioning plant
Gunflint
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 32
Mad Dog
Continues to get bigger
North & Graben
Appraisal Potential
Oil In Place
?
North
West - Producing
East
Spar Location
West
South
North
 Current Spar
p cannot drain all discovered
oil to date
West
East
– West and South areas cannot be fully
reached
East - Producing
South
Mad Dog
g South
appraisal well
& sidetrack
Lower Miocene South
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
– Optimised development scheme will
double ultimate recovery
– Evaluating additional development
options for second Spar
 North area to be appraised during
FY2011 can be tied into main Spar
p for
near term barrels
Slide 33
Browse LNG – long term growth opportunity
Torosa
Brecknock
 Three large gas fields with 14 tcf
Calliance
recoverable reserves
((Source: Wood Mackenzie))
 Retention Lease accepted with
Derby
Gas fields
commitment to US$1.25
US$1 25 billion work
program (100%)
 Basis of Design work started for
upstream facilities and downstream
LNG plant
Source: Woodside.
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 34
Scarborough/Thebe – long term growth
opportunity
 High equity giant gas fields with 10 tcf
recoverable reserves in area
WA 346 P
WA-346-P
– Thebe 100% BHP Billiton
Thebe
Scarborough
Gas fields
WA-351-P
WA-335-P
– Scarborough 50% BHP Billiton
 US$15-20 billion dollar investment (100%)
expected for development of upstream facilities
and LNG plant
 Concept select studies progressing and site
geotechnical survey work commenced
Stybarrow
Pyrenees
Macedon
 Planning for FEED commencement FY2011
 Strong BHP Billiton position currently
– Production
– Projects
– Exploration
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 35
Multi-year exploration drilling program underway
Focus on proven basins
Exploration Strategy




Material in size to BHP Billiton
Balance proven plays and frontier exploration
Opportunities with potential for multiple successes
Control and Operatorship
South China Sea
5+ wells
Gulf of Mexico
5+ wells
Exmouth
5+ wells
Gippsland
2+ wells
Exploration – Proven Basins
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Frontier
Slide 36
Agenda
 BHP Billiton Corporation overview
 Petroleum overview
 Petroleum performance
 Near
N
tterm outlook
tl k
 Longer
g term opportunities
pp
 Summary
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 37
Summary
Key messages
 An integral part of BHP Billiton Group
– Strong performance in key commodity
– Strong functional capability
 Performance
– Safety, volumes, cost – outstanding metrics
– Highly competitive versus peers
 Nearer term
– Near-term volumes impacted by the GOM moratorium, but returning to work
– Driving investment in multiple world class projects and drilling
 Longer term opportunities
– Significant, focused Exploration program
– Advancing world class resources in Western Australia
– Huge Corporate financial capability
BHP Billiton Petroleum, Jefferies Energy Conference, December 2010
Slide 38