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53a meaningful company doing meaningful work delivering meaningful results
Exploration &Production Company
54
Today’s Agenda
• Opening Thoughts
• E&P Overview
• 2006 Comments
• Business Priorities
• Division Reviews
• 2007 Plan Summary
55
Goal To Be Top E&P Performer
• Solid foundation of people and assets in place
• Ability to replace reserves from identified inventory
• Organization executing at higher level of activity
• Build credibility on performance
• Provide visibility on future growth
• Improve capital and operating efficiency
56
El Paso E&P: Top 10 IndependentTotal Company
• Total year production of 798 MMcfe/d
• Year-end reserves of 2,637 Bcfe*
• R/P: 9.1
*Includes our 43.1% share of Four Star; all data 2006 unless noted
Egypt
Texas Gulf Coast
• Total year production of187 MMcfe/d
• Year-end reserves of406 Bcfe
• R/P: 6.0
Onshore*
• Total year production of 413 MMcfe/d
• Year-end reserves of 1,711 Bcfe
• R/P: 11.3
Brazil
• Total year productionof 24 MMcfe/d
• Year-end reserves of 248 Bcfe
• R/P: 28.7
GOM/SLA
• Total year production of174 MMcfe/d
• Year-end reserves of272 Bcfe
• R/P: 4.3
Egypt
• 2 exploration blocks
NileDelta
Sinai
EgyptGulf
ofSuez
Brazil
Rio de Janeiro
57
2006 Production Mix—798 MMcfe/d
International24 MMcfe/d
3%
TGC187 MMcfe/d
23%
GOM174 MMcfe/d
22%
Onshore413 MMcfe/d
52%
2007 range: 800–860 MMcfe/d500
600
700
800
900
2005 2006
MM
cfe/
d
El Paso Production Trend
Note: Includes our 43.1% share of Four Star
58
2006 YE Proved Reserves—2.6 Tcfe
Onshore1,711 Bcfe
65%
GOM272 Bcfe
10%
TGC406 Bcfe
15%
Int'l248 Bcfe
10%PUD27%
PDP62%PDNP
11%
Note: Includes our 43.1% share of Four Star; all data 2006 unless noted
59*Includes our 43.1% share of Four Star; see appendix for further information
Reserve Reconciliation*
Beginning balance 12/31/2005
Production
Extensions and discoveries
Sale of reserves in place
Purchases of reserves in place
Performance Revisions
Reserves before Price Revision
Price Revision
Ending balance 12/31/2006
2,668
(291)
299
(20)
2
40
2,698
(61)
2,637
Equivalent(MMcfe)
60
2006 E&P Capital by Division—$1.2 Billion
2007 capital: $1.7 billion
GOM$310 MM
26%
TGC$217 MM
18%
Int'l$83 MM
6%
Onshore$500 MM
42%
Admin. & Other$91 MM
8%
61
2006 YE Project Inventory
Unrisked Wells
Gross well count
Net Risked Resource
Resource potential (Bcfe)
Technically mature
Technically immature
2,389
625
500
318
310
180
159
180
650
141
660
170
3,007
1,775*
1,500
Onshore TGCGOM/SLA Int’l Total
More than 5 years of project inventory
*Includes 724 Bcfe of PUD reserves including 35 Bcfe of Four StarNote: See cautionary statement on non-SEC proved reserves
62
2006 Accomplishments
• 4%* organic production growth
• 117%* reserve replacement excludingprice revisions
• PVR > 1 at $5.50/$37.00; 1.3 at 12/31/06 strip
• Gross well count up by ~30%
• High drilling success rates on major programs
*Includes our 43.1% share of Four Star; see appendix for further information
63
2006 Accomplishments
• Integrated East Texas and Rockies acquisitions
• Announced significant acquisition for Texas Gulf Coast
• New country entry in Egypt
• Permit approval on Pinaúna (Brazil) exploration wells
• Continued efforts on process improvements
• Exited with 5 years of drilling inventory
64
2006 Challenges
• Volume and reserve performance impacted by:
– Extended GOM hurricane recovery operations
– Delayed cycle-times from services shortages
– Service cost pressures
– Early phase International spending impact
• Industry-wide staffing shortages
65
Priorities for Profitable Growth
• Get the right assets, get the assets right
• Focus on fundamentals
• Drive “Performance Delivery Model” concepts
66
Balanced Portfolio
Region RiskGrowth
Potential Cash Flow
Onshore
TGC
GOM/SLA
Low
Low/Med
Med/High
Med/High
Moderate
Moderate
Low – Flat
High
Generator
Neutral
Generator
UserGOM Int'l
GOM Ons. TGC Int'l
Onshore TGC
(Pc < 40%)High
Med
(Pc > 80%)Low
Ris
k
Int’l
67
Attention to Fundamentals
• Strive to be full-cycle, low-cost
• Benchmark to assess relative performance
• Attract and retain excellent people
68
E&P Performance Delivery Model = Success
69
It All Starts With Inventory
• All employees doing impact work
• Robust database of future ideas
• Characterized by consistent criteria
– Value
– Capital efficiency
– Size and impact
• Generated or re-loaded from:
– Base production optimization
– Resource studies
– Exploration activities
– Acquisitions
License Ready
Drillable
Concepts
Leads
Prospects
Recommended
Rig Ready
Resource Potential• Geologic risked• Mean
Tec
hn
ical
ly M
atu
reT
ech
nic
ally
Imm
atu
re
Mat
uri
ty a
nd
Exe
cuti
on
Cer
tain
ty
Low
High
70
Striving for Excellence
• Learning organization
• Growing competencies
• Project management
• Operations excellence
• Improved safety
Average Rig Activity
2005 2006
WorkoversRecompletionsDrilling & completion
24
115
40
31
16
9
56
71
Onshore
72
Lower-48 Unconventional Resources
*Includes our 43.1% share of Four Star except “net acres”; all data 2006 unless noted
Rockies
Production: 55 MMcfe/dReserves: 246 BcfeNet acres: 364,000
Raton Basin
Production: 76 MMcfe/dReserves: 343 BcfeNet acres: 605,000
Arklatex
Production: 122 MMcfe/dReserves: 448 BcfeNet acres: 104,000
Mid-Continent
Production: 28 MMcfe/dReserves: 110 BcfeNet acres: 319,000
Black Warrior Basin
Production: 64 MMcfe/dReserves: 342 BcfeNet acres: 172,000
Total Onshore*
Production: 413 MMcfe/dReserves: 1,711 BcfeNet acres: 1,692,000Base decline: 20%R/P: 11.3
73
Onshore Characterization
• High-quality, concentrated asset base
– Material core positions
– Extensive project inventory
– Strong positions in resource plays with running room
• Geared for $500 MM–$550 MM annual capital spend
• Targeting repeatable, low-risk programs
• Predictable, mid-single digit production growth
74
Onshore Organic Production Growth
4Q 2005 1Q 2006 2Q 2006 3Q 2006 4Q 2006
Base Capital Uplift
405 405 411 415 420
Average MMcfe/d
Note: Includes our 43.1% share of Four Star
75
2006 YE Onshore Project Inventory
Rockies
Black Warrior
Arklatex
Mid-Continent
Raton
Total
237
672
615
507
358
2,389
195
160
440
115
215
1,125
PlaysUnrisked
Wells
Net RiskedResources
(Bcfe)
4–5 years of inventory
Note: See cautionary statement on non-SEC proved reserves
76
Onshore Competitive Strengths
• Resource play technical expertise
• Proven ability to execute large programs
• Existing inventory of repeatable opportunities
• Concentrated positions with high working interest
• Ability to apply technology for improved efficiency
77
Raton BasinCoal Bed Methane
• Net acres: 605,000• 2007 capital: $115 MM• 2007 gross wells: 178• Average gross well statistics:
– WI: 100%– Capex: $0.5 MM–$0.7 MM– Reserves: 0.3 Bcfe–0.9 Bcfe– Rate: 100 Mcf/d–175 Mcf/d
NM
CO
Vermejo Park Ranch
EPEP minerals
78
• Net acres: 172,000• 2007 capital: $52 MM• 2007 gross wells: 145• Average gross well statistics:
– WI: 74%– Capex: $0.4 MM–$0.5 MM– Reserves: 0.2 Bcfe–0.6 Bcfe– Rate: 100 Mcf/d–300 Mcf/d
Black Warrior BasinCoalbed Methane
Tuscaloosa
Jefferson
AL
Blue Creek West
Short Creek
Brookwood
EPEP lease
White Oak Creek
79
Illinois BasinNew Albany Shale
• Net acres: 118,000• Average gross well stats:
– WI: 47%– Capex: $1 MM– Gross production > 2 MMcf/d
from 14 wells • 2007 Focus
– Expand core producing area– Additional new area tests– Productivity enhancement
Pike
IN
DuboisEPEP lease
Martin
Knox
Daviess
80
Gulf of Mexico (GOM)/South Louisiana (SLA)
81
GOM/SLA Position
TX LAMS AL
Key Statistics
Production: 174 MMcfe/dReserves: 272 BcfeNet acres SLA: 34,000Net acres GOM: 688,000Total net acres: 722,000Decline rate: 40%–50%R/P: 4.3
Note: All data 2006 unless noted
82
GOM/SLA Seismic Coverage
El Paso leases3-D seismic coverageSeismic re-processed in-houseSeismic re-processed by vendors
80,000+ sq. mi. GOM 3-D3,900+ sq. mi. SLA 3-D
Catapult Project
Extensive proprietaryreprocessed seismic
83
GOM/SLA Characterization
• Program emphasis on:
– Discrete structural and stratigraphic plays
– Geophysically-driven programs
– Higher rate, higher return wells
• Geared for about $300 MM of capital spending
– Repeatable portfolio of prospects
– Essentially flat production
84
GOM/SLA Production Growth
4Q 2005 1Q 2006 2Q 2006 3Q 2006 4Q 2006
Base Uplift
107133
165189
209
Average MMcfe/d
85
GOM/SLA Concentrated InventoryMiocene PleistoceneC. Miocene S. AdditionsW. Miocene Texas MioceneMain Pass Onshore S. LA
Houston
New Orleans
Five year inventory at 2006 funding levelsDrill depths from 2,000'–23,500'Additional prospects being generated in core trendsNew trends could add significant impact
86
GOM/SLA Competitive Strengths
• Extensive 3D seismic and leasehold base
• Advanced in-house seismic processing capability
• Expertise in application of seismic AVO technology
• Experience in deep, hostile directional drilling
87
S. LouisianaCatapult Project
18,100'
19,200'
18,700'
19,500'
• Net acres 34,000• 2007 capital: $29 MM• 2007 gross wells: 7• Avg. gross well stats:
– WI: 22% BCP, 37% ACP– Capex: $20 MM–$25 MM– Reserves: ~30 Bcfe– Rate: ~20 MMcf/d – ~500 Bc/d
Lo
wer
Mio
cem
e R
eser
voir
s
Sand Resistivity (HC Indicator)
Siph Shelf
LafayetteLake Charles
EPEP leases3D outline2006 discoveries☼
Planulina Shelf
Camerina Shelf
LA
☼☼☼
☼☼
88
GOM Lower Miocene
• Net acres 226,000• 2007 capital: $145 MM• 2007 gross wells: 14• 66 gross blocks in trends• Avg. gross well stats:
– WI: 34% BCP, 40% ACP– Capex: $25 MM–$30 MM– Reserves: 35 Bcfe–45 Bcfe– Rate: ~30 MMcfe/d
16,970'
17,360'
CRIS R SAND
L. M
ioce
ne
Res
ervo
irs
W. GOM M/L Miocene
ST/GI Miocene
EPEP leases2006 discoveries
89
Texas Gulf Coast
90
Texas Gulf Coast
TX
Note: All data 2006 unless noted
Key Statistics
Production: 187 MMcfe/dReserves: 406 BcfeNet acres: 137,000Base decline: ~ 30%R/P: 6.0
South Texas Wilcox
Production: 27 MMcfe/dNet acres: 25,000
Upper Gulf Coast Wilcox
Production: 32 MMcfe/dNet acres: 31,000
Vicksburg Frio
Production: 123 MMcfe/dNet acres: 81,000
91
Texas Gulf Coast Characterization
• Program features include:
– Elements of onshore resource plays
– Seismically-driven prospect identification
– Detailed subsurface mapping
• Geared for capital growth
– ~ $200 MM on existing assets plus acquisition capital
• Targeting repeatable, mid-risk program
• Expect double-digit production growth in 2007
92
2006 YE Texas Gulf Coast Inventory
S. Texas Wilcox
Wilcox
Vicksburg
Vicksburg Expl.
Upper Frio/Yegua
Total
129
71
71
17
30
318
160
135
135
35
25
490
PlaysUnrisked
Gross WellsNet Resources
(Bcfe)
4–5 years of inventory
Note: See cautionary statement on non-SEC proved reserves
93
Texas Gulf Coast Competitive Strengths
• Legacy assets, data and staff
– Access to infrastructure
– Extensive seismic database (Sabine to Rio Grande)
– Operational expertise
• Significant identified inventory in existing fields
• Attractive rig terms
94
South Texas Vicksburg Starr and Hidalgo Counties
Jeffress• Net acres: 17,000 • 2007 capital: $18 MM• 2007 gross wells: 7• Avg. gross well stats:
– WI: 68%– Capital: $3 MM–$4 MM– Reserves: 2 Bcfe–4 Bcfe– Rate: 2 MMcf/d–8 MMcf/d
Monte Christo• Net acres: 12,500• 2007 capital: $21 MM• 2007 gross wells: 10• Avg. gross well stats:
– WI: 90%– Capital: $2.5 MM–$3.5 MM– Reserves: 1 Bcfe–3 Bcfe– Rate: 1 MMcf/d–3 MMcf/d
Sta
rr C
o.H
idal
go C
o.
EPEP lease3D Coverage
TX
95
Upper Gulf Coast Wilcox Lavaca County
• Net acres: 18,000 • 2007 capital: $32 MM• 2007 gross wells: 7• Avg. gross well stats:
– WI: 88%– Capital: $5 MM–$8 MM– Reserves: 2 Bcfe–4 Bcfe– Rate: 5 MMcf/d–20 MMcf/d
Lavaca
EPEP lease3D Coverage
Sand Resistivity (HC Indicator)
M/L
Wilc
ox
Res
ervo
irs
10,500'
11,000'
14,000'
Dry Hollow/Big Holler/Hope
Speaks/Hardy’s Creek
96
South Texas WilcoxZapata County
• Net acres: 37,000 • 2007 capital: $85 MM• 2007 Gross wells: 30• Avg. gross well stats:
– WI: 90%– Capital: $2 MM–$4 MM– Reserves: 1 Bcfe–3 Bcfe– Rate: 2 MMcf/d–5 MMcf/d
Sand Resistivity
14,000'
13,200'
11,400'
10,700'
Wilc
ox/
Lo
bo
Res
ervo
irs
Zapata
3D Coverage
El Paso E&P Acreage
97
International
98
International Characterization
• Focus on short-cycle oil opportunities in proven plays
• Positions in Brazil and Egypt with low-moderate country risk
• Mix of exploration and development opportunities
• Focus on operated assets
• Investment phase getting underway
• Meaningful reserve/production growth beginning 2008
99
Brazil: Positioned for Growth
Brazil 114 655
UnriskedGross Wells
Net RiskedResource
(Bcfe)
Key Statistics
Net production: 24 MMcfe/dReserves: 248 BcfeNet acres: 361,000R/P: 29
Rio deJaneiro
Note: All data 2006 unless noted; see cautionary statement on non-SEC proved reserves
Potiguar2 Production Blocks2 Development Blocks2 Exploration Blocks
Camamu-Almada1 Development Block5 Exploration Blocks
Espirito Santo1 Exploration Block
Brazil
100
Pinaúna Development
• Project sanctioned at 100% WI
• 1st oil 4Q 2008: 15 Mboe/d peak rate
• 4–5 producers/4–5 injectors
• 2007 Focus: Facilities, procurement and construction
• High pour point oil handled by heated process flow
• Development pending regulatory approval
• Pinaúna is hub for future Sardinha and Camarao phases
Heated Process Flow
Turret Moored FSO
101
Pinaúna Exploration Upside—Cacau and Açai
• Two well drilling program at 100% WI
• Three Southern targets and deeper OWC
• Up to 100 MMboe unrisked potential
• Pc = 34%
3D s
urve
y o
utlin
e
W
PinaúnaPODarea
BAS-73
2
3
Pinaúna Field (BAS-64)37 MMboe R2P1,350 acres(at -2,380 m ss/conservative OWC)
1 3km
Sergi depth
-2380 m OWC
BAS-74
Açaí-1
-2420 m OWC
Cacau-1
BAS-64BAS-64
1
Rio de Janeiro
Brazil
102
Bia & BM-ES-5 Block Prospectivity
Light oil discoveries in Espírito Santo Basinnow total 700 MMboe, all since 2003
10 km
Petrobras oper WI 65%El Paso WI 35%
PotentialNew Discovery-
Prospect Trend
10 km
Petrobras operated WI 65%El Paso WI 35%
Petrobras oper WI 100%
Bia wildcat
New Discovery
Well: 4-ESS-164ADate: April 2006Operator: PetrobrásBlock: BES-100, area 1Reservoir: Upper Cretaceous sandsStatus: Discovery 280 MMbo
(source: www.petrobras.com)
Rio de Janeiro
Brazil
103
Egypt: New Country Entry
2007–2008 Activity
• S. Mariut:
– Aero mag survey
– Minimum 400 Km2 of 3D seismic
• S. Feiran:
– Contingent well
NileDelta
Western Desert
Sinai
El Paso E&P Acreage
Gulf
of
Suez
Block 8 (South Mariut): 100% WIArea: 1.2 MM acres (4,785 km2)
South Feiran: 20% WI (ENI operated)Area: 65,000 acres (262 km2)
Egypt
104
2007 Plan Summary
105
2007 Plan Highlights
• $1.7 billion capital program
– Approximately $1.2 billion domestic O&G capital
– $255 MM TGC acquisition
– $215 MM International O&G capital
• Volume guidance range: Flat to 8% year-to-year growth
• Expect reserve growth of 1%–5% from known inventory
106
2007 Capital Allocation
• Onshore and GOM/SLA essentially flat to 2006
• South Texas Acquisition
– $255 MM acquisition price
– $85 MM E&D capital
• International capital doubles versus 2006
– Pinaúna exploration & development
– Egypt evaluation
– BM-ES-5 block exploration Total = $1.7 Billion
Texas Gulf Coast$566 MM
34%
Int’l $215 MM
13%
Onshore$505 MM
30% GOM/SLA$281 MM
16%
Admin. and Other $113 MM
7%
107
2007 Planned Drilling Activity
(Pc < 40%)High
Med
(Pc > 80%)Low
% of 2007 Drilling Capital
14%
20%
66%
Ris
k
GOM Int'l
GOM Ons.
Onshore TGC
TGC Int'l
23
28
599
Gross Wells
108
2007 Production Profile
0100200300400500600700800900
1,000
2004 2005 2006 2007
Base Capital
829767 798 833
~ 30%base decline
0%–8%growth
MMcfe/d
109
Why We Can Succeed
• Strong foundation of assets and people in place
• Organization-wide focus on performance
• Value-creation mindset
We will become a top E&P performer
110
Q&A