Gaz de France Exploration-Production Successful track record and ambitious prospects
Gaz de France Investor Day 22 May 2007
Disclaimer The objectives summarised above are based on data, assumptions and estimates deemed reasonable by Gaz de France. The said data, assumptions and estimates may evolve or be changed as a result of uncertainties due in particular to the economic, financial, competitive, regulatory or weather conditions. In addition, the materialisation of certain risks factors described in Chapter 4 of the Document de Référence filed with the Autorité des marchés financiers (“AMF”) under Number R07-046 on 27 April 2007 (hereinafter referred to as the “Document de Référence”) could have an impact on the group’s operations and its ability to achieve its objectives. In addition, achieving those objectives is dependent on the success of the commercial strategy described in Chapter 6.1.2 of the Document de Référence. Gaz de France consequently disclaims any undertaking and gives no representation as to the fact that it will achieve its objectives and does not undertake to publish or issue possible revisions or updates of such forward-looking statements or information, beyond what is required by the laws and regulations with which it must comply. This communication does not constitute an offer to purchase or exchange or the solicitation of an offer to sell or exchange any securities of Suez or an offer to sell or exchange or the solicitation of an offer to buy or exchange any securities of Gaz de France, nor shall there be any sale or exchange of securities in any jurisdiction (including the United States, Germany, Italy and Japan) in which such offer, solicitation or sale or exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction. The distribution of this communication may, in some countries, be restricted by law or regulation. Accordingly, persons who come into possession of this document should inform themselves of and observe these restrictions. To the fullest extent permitted by applicable law, Gaz de France and Suez disclaim any responsibility or liability for the violation of such restrictions by any person. The Gaz de France ordinary shares to be issued in connection with the proposed business combination to holders of Suez ordinary shares (including Suez ordinary shares represented by Suez American Depositary Shares) may not be offered or sold in the United States except pursuant to an effective registration statement under the United States Securities Act of 1933, as amended, or pursuant to a valid exemption from registration.
Gaz de France Investor Day 22 May 2007 2
In connection with the proposed business combination, the required information document will be filed with the AMF and, to the extent Gaz de France is required or otherwise decides to register the Gaz de France ordinary shares to be issued in connection with the business combination in the United States, Gaz de France may file with the United States Securities and Exchange Commission (“SEC”), a registration statement on Form F-4, which will include a prospectus. Investors are strongly advised to read the information document filed with the AMF, the registration statement and the prospectus, if and when available, and any other relevant documents filed with the SEC and/or the AMF, as well as any amendments and supplements to those documents, because they will contain important information. If and when filed, investors may obtain free copies of the registration statement, the prospectus as well as other relevant documents filed with the SEC, at the SEC’s website at www.sec.gov and will receive information at an appropriate time on how to obtain these transaction-related documents for free from Gaz de France or its duly designated agent. Investors and holders of Gaz de France and Suez securities may obtain free copies of documents filed with the AMF at the AMF’s website at www.amf-france.org or directly from Gaz de France on its website at: www.gazdefrance.com or directly from Suez on its website at: www.suez.com, as the case may be.
Introduction Jean-Marie Dauger Chief Operating Officer Head of the "Supply & Production" Branch
Gaz de France Investor Day 22 May 2007
Exploration-Production within Gaz de France
Segment
Division
Gaz de France Group Energy Supply and Services
Exploration Production
Purchase and Sale of Energy
+ LNG + Trading
Global Gas Gaz de France Investor Day 22 May 2007 4
Services
Infrastructures
Transmission and Storage - France
Distribution - France
Transmission and Distribution - International
Exploration-Production: Significant contribution to Group’s profitability and growth
In million euros
2006
2005
2004
Net sales
1,659
1,139
968
EBITDA
1,270
726
625
935
457
229
Operating income
Contribution to Group 2006 EBITDA
Contribution to Group 2006 Operating profit
26%
Proportion of 2005-06 Group Capex*
20%
25%
Gaz de France Investor Day 22 May 2007 5
15% in 2004
10% in 2004
* Investments excluding external growth
Strong cash flow generation: over €1 billion in 2006 €m 1 200 1 000
Cash Flow 800
Capex 600
Net Cash flow*
400 200 0 2004
2005
Gaz de France Investor Day 22 May 2007
* Net Cash flow: EBITDA – taxes + EFOG (dividends & debt repayments) - Capex 6
2006
Exploration-Production Didier Holleaux Vice President Exploration-Production
Gaz de France Investor Day 22 May 2007
Gaz de France Exploration-Production
Exploration-Production a fully established player Successful track record Growth driven strategy Assets & projects portfolio Ambitious prospects Wrap up Gaz de France Investor Day 22 May 2007 8
Gaz de France Exploration-Production
Exploration-Production a fully established player Successful track record Growth driven strategy Assets & projects portfolio Ambitious prospects Wrap up Gaz de France Investor Day 22 May 2007 9
Multi-country organisation
GDF Britain Mark Hugues Germany (PEG) Patrick Vannetzel Albrecht Möhring Netherlands (ProNed) Jan Treffers
*
Vice President Didier Holleaux Deputy Vice President Philippe Marcus
Norway (Gaz de France Norge) Bernard Ott
Subsurface expertise Henri de Moegen
Germany (EEG) Jürgen Rückheim
Exploration Philip Drijkoningen
North Africa Team (NAT) Gilbert Meunier
Operations Maqsood Sher
West Africa & Middle East Team (WAME) René Montaz-Rosset
Development Thierry Lefeuvre
1
Exploration-Production a fully established player
1,115 employees
Finance Monique Huet
Gaz de France Investor Day 22 May 2007 10
* Merger expected in 2007
Legal, commercial, human resources, communication …
316 exploration and production licenses 193 operator licenses Total acreage (2006) • 70 000 km2 (gross GdF) • 31 500 km2 (net GdF)
1
Exploration-Production a fully established player
Large portfolio of licenses
Gaz de France Investor Day 22 May 2007 11
Exploration Production Exploration
Producer in 5 countries, active in 9 UK
Norway
Exploration-Production a fully established player
16th gas producer 21st liquid producer 19th for oil & gas reserves
13th liquid producer for oil & gas reserves 13th for gas
13th
Germany 3rd gas producer 5th liquid producer Top 5 for oil & gas reserves Netherlands 3 - 4th gas producer Top 5 for oil & gas reserves
1
Ivory Coast
Gaz de France Investor Day 22 May 2007 12
Production dedicated to a local power plant Sources: WoodMackenzie, NPD, WEG, UKOOA. Positions exclude state entities: Petoro/SDFI and EBN
Exploration, development and production • Onshore: Germany, Algeria • Offshore: UK, Netherlands, Norway, Germany • Gas and oil Skills to operate some non-conventional fields • Tight gas reservoirs Synergies with Gaz de France’s LNG* and gas storage expertise
1
Exploration-Production a fully established player
Strong skills in conventional projects
Gaz de France Investor Day 22 May 2007 13
* Liquefied natural gas
Excellent position in Exploration-Production market
International Oil Companies (IOC) • Focus on managing large projects • Present in NOCs countries Independents • Competitive, tightly-run companies with focused expertise • Competitive advantage in smaller fields Utilities • Very few utilities own significant E&P business units • Focus on assets within easy reach of their markets
1
Exploration-Production a fully established player
National Oil Companies (NOC) • Own major share of global oil & gas reserves • Need less foreign investment & technology than in past
Gaz de France Investor Day 22 May 2007 14
Gaz de France Exploration-Production ranks among the largest mid-sized Independent players. As a Utility, benefits from Group cross synergies
1
Exploration-Production a fully established player
Top standard reserve evaluation Proven and Probable (2P) reserves evaluated on guidelines from: • Society of Petroleum Engineers (SPE) • World Petroleum Congress (WPC) Internal evaluation process based on industry best practices • Affiliates evaluate reserves following HQ guidelines updated annually • HQ reviews all assets and implements dedicated audits on selected assets annually • DeGolyer&McNaughton* certified 98% of reserves in past 3 years One third of reserves certified annually by independent, external audit
Gaz de France Investor Day 22 May 2007 15
* Independent leading worldwide company in certification
SPE / WPC reserve evaluation criteria
Gaz de France
PRODUCTION RESERVES PROVED (1P)
PROVEN + PROBABLE (2P)
PROVEN + PROBABLE + POSSIBLE (3P)
CONTINGENT RESOURCES LOW ESTIMATE
BEST ESTIMATE
UNRECOVERABLE
Discovery PROSPECTIVE RESOURCES LOW ESTIMATE
BEST ESTIMATE
16
HIGH ESTIMATE
UNRECOVERABLE RANGE OF UNCERTAINTY
Investor Day 22 May 2007
HIGH ESTIMATE
PROJECT MATURITY
COMMERCIAL DISCOVERED SUB-COMMERCIAL
Commerciality
UNDISCOVERED
1
Exploration-Production a fully established player
Lower risk
NB: sub-commercial covers mainly fields for which commerciality is not yet proven and still subject to additional work (different from sub-economic: not economic in the current prices and/or technologies).
Higher risk
Decreasing uncertainty for reserves evaluation
1
Exploration-Production a fully established player
Phase
Exploration
Appraisal High
Uncertainty Medium Low
Available Data
3P 2P 1P
Wells Production Data Analogy Static Calculation
Method of evaluation
Numerical Simulation Material Balance Decline curve analysis
Classification
Prospective Resources
Contingent Resources
Investor Day
17
Production
Seismic
Gaz de France
22 May 2007
Development
Time line and level of certainty
Reservess
Gaz de France Exploration-Production
Exploration-Production a fully established player • Operation
Successful track record
• Finance • Exploration
Growth driven strategy Assets & projects portfolio Ambitious prospects Wrap up Gaz de France Investor Day 22 May 2007 18
Solid asset portfolio built in just one decade 1994 - 1999: the early years • Acquisition of EEG and EFOG, creation of GDF Britain 2000 - 2003: acceleration • Acquisition of GdF ProNed, PEG
2
Successful track record
• Asset deals: Snohvit, Gjoa, assets in NL and UK 2004 - 2006: consolidation • Successful integration of previous acquisitions • Portfolio management: KMG sale and asset swaps in UK • Strong focus on internal growth Increased resources for exploration Successful nearby field drilling and exploration in NL & UK Gaz de France Investor Day 22 May 2007 19
Entry to new markets at exploration stage in Egypt & Mauritania
Strong growth profile in reserves 2P1 reserves in Mboe2 Gaz de France outperformed E&P sector based on successful growth strategy
+10 % 669
753
695
685
In 2006, 2P reserves/production ratio = 15 years
479 1
Proven and probable reserves (SPE definition, including EFOG) Million of barrel of oil equivalent Source: Herold Global Upstream Performance Revenue
2002
2003
2004
2005
2006
Evolution of 2P reserves (2001 – 2006) 273
207 685
105 66
2
Successful track record
2
448 448
Gaz de France Investor Day 22 May 2007 20
1/1/2002
Discoveries
Revisions
Acquisition
Production
31/12/2006
Profitable growth
1800
55 50
+13%
1500
900
+42%
40
+53%
35 30
600
+112%
25
300
20
0
15 2002
2003
2004
2005
2006
2
Successful track record
MEUR
1200
Gaz de France
Net sales* EFOG net results
EBITDA* Operating Income* Oil & gas production incl. EFOG
Investor Day 22 May 2007 21
* Net sales, EBITDA and Operating Income do not account for EFOG consolidated under the Equity Method
Mboe
45
Diversified portfolio of commercial contracts Gaz de France primarily operates concession contracts • With the exception of Ivory Coast PSC* accounts for < 1% of production and reserves Sales portfolio breakdown (% production) 100%
Brent related (oil)
2
Successful track record
80%
Gaz de France
Market price (gas)
60% 40%
Long term contract (gas)
20% 0%
2004
2006
2007 estimated
New production fields to modify sales portfolio breakdown
Investor Day 22 May 2007
* PSC: Production Sharing Contract 22
2005
Competitive technical costs Technical costs1 in eur/boe
13.6
12.9
12.8
12.7
13.3
2001-02
2002-03
2003-04
2004-05
2005-06
Successful track record
Peer Group2 Europe (2 years average)
Investor Day 22 May 2007 23
Source: Internal research
Technical costs very comparable to Peer Group2 composed of main license partners In the context of rising cost for E&P sector 3, Gaz de France costs are remaining stable
2 Gaz de France
GdF (2 years average)
1
For the definition of technical costs: see appendices Peer group includes european activities of Majors, Independants and Utilities (BG, Centrica, CoP, Dana, Dong, ENI, Hess, Marathon, MOL, Norsk Hydro, OMV, Petro-Canada, RWE-Dea, Statoil, Talisman, Total, Wintershall) 3 See appendix 2
Strong cash flow generation: over €1 billion in 2006 Exploration-Production cash flow before capex: €2.2 billion generated in three year period €m 1 200 1 000
Cash Flow
2
Successful track record
800
Gaz de France Investor Day
Capex
600
Net Cash flow*
400 200 0 2004
2005
Tax position optimised and/or special incentives benefits • E.g. Norway - GdF E&P offsets total revenue against fiscal deficit
22 May 2007
* Net Cash flow: EBITDA – taxes + EFOG (dividends & debt repayments) - Capex 24
2006
Sustained Upstream investments 3 billion euros invested in past 5 years • Acquisition of PEG in Germany • Asset deals in UK and Netherlands • Development projects in Norway and Netherlands
Capex (acquisition, development, exploration) 1 500 1 250 1 000 750 500 250 0
Successful track record
In MEUR
2002
2003
2004
Capex development
CAGR +17% 2002-2006
2005
Acquisition
2006 Exploration
Exploration budget 200
In MEUR 150
CAGR +17%
2
100 50 Gaz de France Investor Day 22 May 2007 25
0 2002
2003
2004
2005
2006
Exploration track record Successful track record
Philip Drijkoningen
2
Head of Exploration
Gaz de France Investor Day 22 May 2007
Reserve Replacement Ratio* Reserve Replacement Ratio* 400% 298% 300%
Acquisition of PEG
200% 112%
2
Successful track record
100%
Gaz de France
0%
2002-2004
Time between discovery and booking reserves • Most discoveries are classified as Contingent Resources until they meet reserve definition criteria Acquisitions and divesture significantly impact RRR* • PEG acquisition in 2003, KGM sale in 2006
Investor Day 22 May 2007 27
2004-2006
* RRR = ( Revisions + Discoveries + Acquisitions – Sales) / Production Computed on a three years average based on 2P reserves
57% success rate in exploration Number of exploration wells 14 12
Mauritania
10
Egypt
8
Algeria Norway
6
Germany
4
Netherlands
2
Successful track record
2
Gaz de France Investor Day 22 May 2007 28
0
UK 2002
2003
2004
2005
2006
24 discoveries out of 42 exploration wells: • 57% of success +200 million barrels discovered: • 2P reserves + unrisked contingent resources
Competitive finding costs
Finding costs for 2P Reserves and Contingent Resources (unrisked) • 1.8 Euro/boe
2
Successful track record
Finding costs limited to 2P Reserves
Gaz de France Investor Day 22 May 2007 29
• 6.7 Euro/boe Finding costs calculated as ratio of budget/volume over 5 years period
Industry benchmark confirms our solid performance Success rate (2000-04) 60% 50% 40% 30% 20% 10% 0%
Finding Cost US$/boe (2000-04)
20 15 GDF
Peer Group*
10
2
Successful track record
5
Gaz de France Investor Day 22 May 2007 30
0 GDF
Peer Group*
IRR 40% 30%
* Peer Group: BG, Marathon, Apache, Repsol-YPF, Wintershall, Norsk Hydro, Total, OMV, DONG, Woodside, Occidental, Amerada, Kerr-McGee, Talisman, RWE-Dea, ENI, ConocoPhilips, Encana. Company results not disclosed for confidentiality reasons.
20% 10% 0%
Source: Survey performed by WoodMackenzie early 2006
GDF
Peer Group*
Gaz de France Exploration-Production
Exploration-Production a fully established player Successful track record Growth driven strategy Assets & projects portfolio Ambitious prospects Wrap up Gaz de France Investor Day 22 May 2007 31
Our ambition: achieve double digit growth in production
Objective of 1,000Mboe for 2P reserves
3
Growth driven strategy
Balance between oil and gas
Gaz de France Investor Day 22 May 2007 32
Double digit growth for production
Our growth strategy
Enlarge geographic coverage
3
Growth driven strategy
Balance organic and external growth
Gaz de France Investor Day 22 May 2007 33
Leverage value for other Group divisions
Enlarge geographic coverage
Currently active in Europe and North Africa
3
Growth driven strategy
Strong position built in a short period of time in mature countries, closed to our markets
Gaz de France Investor Day 22 May 2007 34
Reinforce positions in "growth" countries • Norway, Algeria Enlarge geographic coverage to new growth regions • West Africa, Middle East, Caspian Sea
Drivers and challenges for organic growth
3
Growth driven strategy
Drivers • Develop production nearby existing fields and infrastructures • Grow existing portfolio reserves and resources • Explore new opportunities and book future reserves
Gaz de France Investor Day 22 May 2007 35
Challenges • Increasing share of frontier area in exploration portfolio • Technical challenges: High Pressure/High Temperature, Tight gas, Deep Water
We are confident, we have the right people & skills to meet these challenges
External growth strategy
Boost operations and growth in new regions • Initiate and sustain exploration efforts via bidding rounds, farm ins and acquisition of focused exploration portfolios • Accelerate learning curve (subsurface expertise, etc) in a given basin
3
Growth driven strategy
• Provide critical size in new areas
Gaz de France Investor Day 22 May 2007 36
Balance asset portfolio across all stages (exploration, development, production) to sustain long term growth Take advantage of value driven opportunistic acquisitions in line with capital discipline
3
Growth driven strategy
Leverage value for Gaz de France’ other activities
Gaz de France Investor Day 22 May 2007 37
Synergies with Purchase & Sales division • Development in markets where supply is "tight" or already contracted by incumbents Germany • Integration along the value chain LNG in Norway can be shipped to Europe or the US • Support entry to Exploration-Production assets Idku LNG plant, Elgin Franklin Access new storage sites in countries where capacities are needed • Depleted fields and salt caverns in Germany
Gaz de France Exploration-Production
Exploration-Production a fully established player Successful track record Growth driven strategy
• Main producing countries • Development projects
Assets & projects portfolio Ambitious prospects Wrap up Gaz de France Investor Day 22 May 2007 38
• Exploration portfolio • Acquisition strategy
Balance between regions and maturity of projects
Snohvit (Barents Sea)
Frontier areas
Barents Sea Mauritania
Norvegian Sea
Gjoa Touat
On trend basins
Egypte (Nile Delta)
Algeria
Central North Sea
Mature basins
Southern gas basin (UK, NL, Germany)
4
Assets & projects portfolio
West of Shetland
Gaz de France Investor Day
Production
Development
Exploration
22 May 2007 39
Cash cows
Medium to long term
2006 production and reserves 2006 Production: 45.5 Mboe
MBoe/year
0.1 Liquids 4.4
3.5
8.5
8.9
Gas
14.6 2.0 0.4 Netherlands UK Germany Norway Others
4
Assets & projects portfolio
3.3
Gaz de France Investor Day 22 May 2007 40
14.6
12.8
12.4
3.3
Current production coming mostly from asset portfolio in Netherlands, UK and Germany Others include Kazakhstan (sold in 2006) and Ivory Coast (not consolidated until 2007)
2.4
2P Reserves: 685 Mboe Others Germany
Netherlands
UK 95.5
164.1 94.1
321.3
Norway
Short term production growth will come mostly from Norway: 47% of 2P reserves
Assets & projects portfolio
Video presentation
4
GdF ProNed
Gaz de France Investor Day 22 May 2007
Assets & projects portfolio
Netherlands and G block case study Jan Treffers
4
President & General Manager GdF ProNed
Gaz de France Investor Day 22 May 2007
GdF Proned: 3rd producer in the Netherlands
Reserves (end 2006) • 94 Mboe net GDF Production planned 2007/2008
670 km of pipeline • Inclusive 480 km NGT NGT* treating plant Uithuizen Revenues 2006
Operate 30 platforms and 5 sub-sea wells
• €545 million 220 employees (incl NGT)
74 producing wells • Capacity 15 M m3/day
Average 140 contractors
4
Assets & projects portfolio
• 28 Mboe net GDF
Gaz de France Investor Day 22 May 2007 43
* Noordgastransport B.V.
GdF Proned: competitive differentiation Successful exploration results • 57% average success ratio in last 5 years
4
Assets & projects portfolio
Low cost operator (operating and investment) with high HSE standards
Gaz de France Investor Day 22 May 2007 44
Innovative operator • 1st in sub-sea development in Netherlands (1988) • World’s largest offshore CO2 removal plant (1987) • 1st to re-use platforms (5 platforms re-used, 1 planned in 2007)
4
Assets & projects portfolio
G block case study – success story
Gaz de France Investor Day 22 May 2007 45
G-Blocks
4
Assets & projects portfolio
G block case study – success story
Gaz de France Investor Day 22 May 2007 46
4
Assets & projects portfolio
G block case study – success story First discovery
Gaz de France Investor Day 22 May 2007 47
1999/2000: G17-4 farm-in well discovered G17d-A field (2.3 BCM gross reserves)
G17-4
4
Assets & projects portfolio
G block case study – success story First gas production
Gaz de France Investor Day 22 May 2007 48
2002: G17d-A Platform & NGT pipeline installed First gas production G-blocks G17d-A
G block case study – success story Cooperation with Nam
2002: Joint NAM/GDF well: G14-2 Gas shows
4
Assets & projects portfolio
G14-2
Gaz de France Investor Day 22 May 2007 49
G block case study – success story Sole risk GDF well
2003: Sole risk GDF well: G14-2st Discovered G14-A field (Reserves 6 BCM)
4
Assets & projects portfolio
G14-2st
Gaz de France Investor Day 22 May 2007 50
G block case study – success story GDF acquires blocks from Nam
4
Assets & projects portfolio
2003: GDF Acquired blocks G16a&b with G16a-A field from NAM (1.7 BCM reserves)
Gaz de France Investor Day 22 May 2007 51
G16a-A field
G block case study – success story GDF becomes operator
4
Assets & projects portfolio
2004: Drilled G14-3 well to farm-in to G14 block and obtain operatorship from NAM Discovered G14-B field (3.6 BCM reserves)
Gaz de France Investor Day 22 May 2007 52
G14-3
G block case study – success story New discoveries
4
Assets & projects portfolio
2004: G17-5 gas discovery found G17a-S1 field (1 BCM reserves)
Gaz de France Investor Day 22 May 2007 53
G17-5
G block case study – success story New infrastructures
4
Assets & projects portfolio
2005: G14-A, G16a-A and G17d-AP platforms & G17a-S1 subsea installed
Gaz de France Investor Day 22 May 2007 54
G14-A
G16a-A G17a-S1 G17d-AP
2005: Pipelines connecting G14-A, G16a-A and & G17a-S1 to G17d-AP platform installed
2005: G14-4 gas discovery found G14-C field (1.9 BCM reserves)
G block case study – success story Normal industry risks
2005: G14-5 dry well
4
Assets & projects portfolio
G14-5
Gaz de France Investor Day 22 May 2007 55
2006: G17-6 dry well
G block case study – success story Still a prospective area
Future G14 exploration well?
4
Assets & projects portfolio
2007: G16-7 exploration well
Gaz de France Investor Day 22 May 2007 56
Future G16 exploration well?
The G block success story
Discovered and developed 80 MBoe of gas within 3 years in a mature region (net annual sales to Gaz de France of 4 Mboe)
4
Assets & projects portfolio
Invested 300 million euros (gross)
Gaz de France Investor Day 22 May 2007 57
Combined investment in infrastructure, farm-in opportunities, exploration (incl sole risk) and acquisition Built vast Gaz de France ProNed experience
4
Assets & projects portfolio
UK: 3 main distinct basins in GDF Britain and EFOG
Gaz de France Investor Day 22 May 2007 58
Southern North Sea • Around CMS pipeline CMSIII developments Minke (NL/UK) • More growth potential Central North Sea • Main asset EFOG And Frontier areas • West of Shetland: exploration licenses
4
Assets & projects portfolio
EFOG: e.g of downstream - upstream synergies
Gaz de France Investor Day 22 May 2007 59
• High Pressure / High Temperature • Operated by Total • Gaz de France Purchase & Sale division as customer for gas
Assets & projects portfolio
Exploration-Production in Germany Albrecht Möhring
4
Managing Director, Technical Affairs Gaz de France - PEG
Gaz de France Investor Day 22 May 2007
Nearly 30 % of Gaz de France total production
4
Assets & projects portfolio
Activity • Oil & gas exploration • Production • Marketing • Gas storage facilities
Gaz de France Investor Day 22 May 2007 61
Key figures (2006) • Reserves: • Gas Production: • Oil Production: • Revenues: • Employees:
164 Mboe 8.85 Mboe 3.5 Mboe €600 million 670
GDF-PEG Share of total GDF Production (2006)
26% Oil
28% Gas
Production areas in Northern Germany
NORTH SEA OSTFRIESLAND ROTENBURG/ TAAKEN
REITBROOK
OSTHANNOVER
LINGEN EMSLAND
ALTMARK BERLIN
SCHNEEREN/ WIEHENGEBIRGE EMPELDE
MÄRKISCH ODERLAND
WESTTHÜRINGEN
D GAS REGION OIL REGION GAS STORAGE CONCESSION AREA
4
Assets & projects portfolio
HAMBURG
OSTHANNOVER PECKENSEN
EMSLAND
NL
NORD/OST VORPOMMERN
Gaz de France Investor Day 22 May 2007 62
FRONHOFEN SCHMIDHAUSEN
4
Assets & projects portfolio
Tight Gas Development: Innovative technology (1/9)
Gaz de France Investor Day 22 May 2007 63
Tight Gas Development: Innovative technology (2/9)
4
Assets & projects portfolio
Leer Exploration Depth Structure Map of the "Base Zechstein"
Gaz de France Investor Day 22 May 2007 64
4k m
12 potential exploration targets are in the closer vicinity of the Leer Central Block Exploration wells might enable us to tie a suitable rig to the project in a long term view
Tight Gas Development: Innovative technology (3/9)
4
Assets & projects portfolio
Base Z - Depth Structure (Pre-well adjustment) (3D Seismic, PreSDM Interpretation MARSKY 2003)
Gaz de France Investor Day 22 May 2007 65
LEER Structure
P90
OGIP (M boe)
25
Mean
45
P10 60
Tight Gas Development: Innovative technology (4/9) W-E Geological Cross-Section through the Leer Block W Teufe [m]
E
Leer Z4 Breinermoor
LEER
32“ 500
Quartär
Tertiär
13 3/8“ 1000
Oberkreide
4
Assets & projects portfolio
1500
Salzstock Rhaude 2000
Unterkreide 2500
3000
Jura
9 5/8“ Keuper Muschelkalk
3500
4000
4500
5000
Rotliegend Karbon (Westfal C)
Zechstein
22 May 2007 66
FWL 4464 m GWC~ ~4470m
4 1/2“ Leer Block
Gaz de France Investor Day
Heidberg-Dambeck-Member Bahnsen-Wustrow-Member (gasführende Sandsteine)
7“
Buntsandstein
5500
0
500
1000
1500
2000
2500m
Tight Gas Development: Innovative technology (5/9) W-E Geological Cross-Section through the Leer Block W Teufe [m]
E
Leer Z4 Breinermoor
LEER
32“ 500
Quartär
Tertiär
13 3/8“ 1000
Oberkreide
4
Assets & projects portfolio
1500
Salzstock Rhaude 2000
Unterkreide 2500
3000
Jura
9 5/8“ Keuper Muschelkalk
3500
4000
4500
5000
Rotliegend Karbon (Westfal C)
Zechstein
22 May 2007 67
FWL 4464 m GWC~~4470m
4 1/2“ Leer Block
Gaz de France Investor Day
Heidberg-Dambeck-Member Bahnsen-Wustrow-Member (gasführende Sandsteine)
7“
Buntsandstein
5500
0
500
1000
1500
2000
2500m
Tight Gas Development: Innovative technology (6/9)
4
Assets & projects portfolio
Frac Technic
Gaz de France Investor Day 22 May 2007 68
Tight Gas Development: Innovative technology (7/9)
4
Assets & projects portfolio
Frac Technic
Gaz de France Investor Day 22 May 2007 69
Tight Gas Development: Innovative technology (8/9)
4
Assets & projects portfolio
Leer Z4 - Gas Test
Gaz de France Investor Day 22 May 2007 70
Test Rate: 14,000 m³/h vs 4,000 m³/h without technology
Tight Gas Development: Innovative technology (9/9)
4
Assets & projects portfolio
Leer Z4 - Facility
Gaz de France Investor Day 22 May 2007 71
Norway: High potential portfolio
4
Assets & projects portfolio
from Barents Sea to Northern North Sea
Gaz de France Investor Day 22 May 2007 72
Assets & projects portfolio
Video presentation
4
Snøhvit
Gaz de France Investor Day 22 May 2007
Snøhvit - challenging & innovative project
• Fields: Snøhvit, Albatross and Askeladd, discovered in 1981–84 • Water depth: 250 – 340 m
4
Assets & projects portfolio
• Distance to shore: 140 km • Gas in place (GIIP):
317 GSm3 / 11.2 TCF
• Condensate:
34 MSm3
• Annual LNG production :
5.7 GSm3
• Annual GPL production:
130000 to 330000t
• Annual Condensate prod. : 370000 to 630000t • Consortium: Statoil ASA (Operator)
33.53%
Petoro AS
30.00%
Total E&P Norge AS
18.40%
Gaz de France Norge AS
12.00%
Amerada Hess Norge AS
3.26%
RWE Dea Norge AS
2.81%
Gaz de France Investor Day 22 May 2007 74
Assets & projects portfolio
4 Gaz de France Investor Day 22 May 2007 75
Gjoa project – offers huge potential Off shore gas field situated in the Northern part of Norwegian Sea Partnership structure: Camilla-Gjøa Belinda
• Gaz de France (30%) • Statoil (20%) • Petoro (30%)
4
Assets & projects portfolio
• Shell (12%)
Gaz de France Investor Day 22 May 2007 76
Florø
35/8
Fram
Troll
• RWE-Dea (8%)
Fram B
61°
Mongstad Sture
Gaz de France at 15% in Vega (Fram B): joint development with Gjoa Statoil: operator during development phase Gaz de France: operator for the production phase Investment for Gaz de France (Gjoa and Vega): €1.1 billion Gas piped to St Fergus (Scotland) Liquids (20% of reserves) exported to Mongstad (Norway)
Bergen
Gjoa: Development concept Gjøa – Vega: joint development
Gjøa
4
Assets & projects portfolio
Vega
Gaz de France Investor Day 22 May 2007 77
Gas export
El-power from shore
Oil export
Algeria -Touat project
Production Sharing Contract signed Jan 2003
• Phase I: 2003-2005 4 wells/ 500 Km2 of 3D seismic • Phase II: 2006-2007 4 wells/ 500 Km2 of 3D seismic • Phase II ended successfully First gas expected in 2011
4
Assets & projects portfolio
Gaz de France 75% as operator, Sonatrach 25%
Gaz de France Investor Day 22 May 2007 78
Expected total upstream investment +/- $1 billion
Assets & projects portfolio
Video presentation
4
Touat
Gaz de France Investor Day 22 May 2007
Assets & projects portfolio
Exploration strategy Philip Drijkoningen
4
Head of Exploration
Gaz de France Investor Day 22 May 2007
Exploration Strategy
Continue with value driven nearby field exploration in mature regions
4
Assets & projects portfolio
• Benefit from short time-to-market, regional expertise and low risk acreage
Gaz de France Investor Day 22 May 2007 81
Manage evolving portfolio mix of higher reward, higher risk opportunities in emerging countries • Develop regional knowledge to identify new promising regions • Ensure prospect profile meets strategic fit, competitive advantage and Gaz de France’ objectives • Apply technical and risk assessment methods to measure opportunities
Exploration Budget
4
Assets & projects portfolio
Long term target risk/reward balance Type of exploration
% of budget
Standard POS*
Nearby Field Exploration - Lower Risk - Smaller size fields
40-60%
45%
Evolving Plays / On Trend - Moderate Risk/reward
20-40%
25%
Frontier Plays - Higher Risk/reward - Larger volumes
10-30%
15%
2006 and 2007 exploration budget: €150 million
Gaz de France Investor Day 22 May 2007
* Probability of Success 82
Exploration & appraisal wells to be started in 2007*
4
Assets & projects portfolio
United Kingdom • 30/2a,2c Jackdaw • 44/19b Harrison • 47/14b Juliet
Gaz de France
Germany • Boetersen Sued Z1 • Kirchdorf Z1 • Kempten 1 • J10-1 • B15alpha Netherlands • G16-7 Truffle • D15-Tourmaline • F17a-S1
Investor Day 22 May 2007 83
* Results of some wells will be known in 2008
Norway • PL90D C-East • PL90 F-West • PL90 H-North • PL110 Askeladd Beta • PL110 Snohvit oil app • PL107/132 Njord NWF A • PL329 Cygnus • PL289 Marsvin Egypt • West Burullus
Development in enlarged Europe Barents Sea Norway Norvegian Sea Norway Norvegian North Sea Norway Denmark
4
Assets & projects portfolio
West of Shetland United Kingdom
Gaz de France Investor Day 22 May 2007 84
Central North Sea United Kingdom
Southern Gas Basin United Kingdom Netherlands Germany offshore Germany onshore
Eastern border
North Africa, West Africa, Middle East, Caspian Sea Nile Delta Basin Egypt
Mauritania offshore
4
Assets & projects portfolio
Sbaa Basin Algerie
Gaz de France Investor Day 22 May 2007 85
Ivory Coast offshore
Exploration licenses currently held by GdF Projects under analysis –focus for the area
Gaz de France Exploration-Production
Exploration-Production a fully established player Successful track record Growth driven strategy Assets & projects portfolio Ambitious prospects Wrap up Gaz de France Investor Day 22 May 2007 86
Boost organic growth Organic Capex 2007-2011 • Budget €3-3.5 billion (Gjoa, Touat.., excl. acquisitions)
Production organic growth 2007-2011
5 Gaz de France Investor Day 22 May 2007 87
MBoe/year
Ambitious prospects
Estimated Production profile 70 60 50 40 30 20 10 0
+ 6%
61
45
2006
2011
Balance of organic and external growth Significant developments in near future, in addition to exploration to boost production
Exploration Norway upside
20 13
20 12
20 11
20 10
20 09
20 08
Appraisal North Sea Current reserves External growth
20 07
20 06
1 000 900 800 700 600 500 400 300 200 100 0
5
Ambitious prospects
Reserve profile (Mboe)
Gaz de France Investor Day 22 May 2007 88
Targeted acquisitions to complete reserves and reach 1 billion barrels
Gaz de France Exploration-Production
Exploration-Production a fully established player Successful track record Growth driven strategy Assets & projects portfolio Ambitious prospects Wrap up Gaz de France Investor Day 22 May 2007 89
Wrap up Gaz de France is well positioned as an established Exploration-Production company Our track record in generating growth is excellent
6
Wrap up
We aim to be a large Independent in terms of size and profitability
Gaz de France Investor Day 22 May 2007 90
To achieve this, we will: • Capitalise on existing positions • Develop reserves and resources already in our portfolio • Explore new opportunities and book future reserves • Boost external growth and balance portfolio by acquiring profitable assets
Thank you for your attention It’s time for questions !
Gaz de France Investor Day 22 May 2007
Appendices / Back-up
Gaz de France Investor Day 22 May 2007
Booming upstream investments Strong competition for assets and large number of "new entrants" such as NOCs outside their own countries and small exploration firms Lead to very significant increase in E&P investments worldwide E&P investments in billion USD 350 300 250
Appendices
150
7
200
0
100 50
2004 Gaz de France
North America
Investor Day 22 May 2007 93
Source: IFP 2006
2005 Latin America
2006 North Sea
2007e Russia and China
Others
Rising production and development costs Upstream costs on the rise for few years • Increased investments in E&P and • Higher commodity prices driven by overall economic growth Shortage of rigs and experienced people Rising drilling and construction costs Delays in developments Evolution of Upstream capital costs (index 100 in 2000) 190 170
7
Appendices
150
Gaz de France Investor Day 22 May 2007 94
130 110 90 2000 2001 2002 2003 2004 2005 2006
Source: les Echos / CERA
In such a context, know how of operating companies is key: management of drilling rigs, planning, control of investments … help minimize risks
National Oil Companies (NOC) Very different history and legal context Largest part of oil and gas reserves in the world: more than 75% of oil reserves and 60% of gas reserves Less in need of International Oil Companies for investment
Tend to invest more and more outside their own backyard
7
Appendices
Still in need for technologies ?
Gaz de France Investor Day 22 May 2007 95
Look for upstream to downstream integration
Source: James Baker Institute – Rice University Based on Proven reserves figures – not exhaustive
International Oil Companies (IOC) Successors of the Seven Sisters: Exxon Mobil, BP, Chevron, Shell IOCs also include: Total, ENI, ConocoPhillips… "Mega"mergers took place since the Seven Sisters, but decreasing share of the oil&gas reserves since mid 70s
7
Appendices
Some companies are intermediate between IOCs and NOCs: Statoil, Petronas…
Gaz de France Investor Day 22 May 2007 96
Competitive advantages in managing large projects and in technologies Large projects tend to be located in countries with strong NOCs: • Face growth difficulties along with the increasing political and financial strengths of NOCs
E&P Independents
Smaller size portfolios
7
Appendices
Very specific risk profile with strong focus on: • Limited number of countries • Few type of projects/technologies
Gaz de France Investor Day 22 May 2007 97
Comparative advantage in smaller fields: • More reactive • Lower fixed costs • Increasing role as average field size declines ? M&A market very active, smaller size producers tend to merge or acquire each other
Utilities companies
Few North American utilities developed upstream business (Calenergy …)
7
Appendices
Limited number of European utilities have really invested in E&P: RWE-Dea, Eon Ruhrgas, Centrica
Gaz de France Investor Day 22 May 2007 98
Generally looking for assets within reach of their markets
From exploration to production For historical reasons, time to market has been very long in E&P: • The average for oil in the world is 12-15 years • More than 30 years for gas: huge amount of stranded gas
Elgin/ Franklin (UK)
G14 (NL)
1986-91 Discoveries
2002-04 Discoveries
1997 Development sanction
2004 Development sanction
1997-2001 Platform Construction
2004-06 Platform Construction
2001 Start of production
2006 Start of production
2042 Estimate of abandonment
2019 Estimate of abandonment
7
Appendices
Significant difference between mature areas with existing infrastructure and green field areas …
Gaz de France Investor Day 22 May 2007 99
SNØHVIT : an integrated project from gas and condensate production to LNG shipping
Slug catcher
Inlet facilities
Pretreatment
Carbon dioxide
LNG production MEG recovery Snøhvit
Precooling cycle
Liquefaction cycle
Subcooling cycle
Production wells Fractionation
Production wells Plem Condensate production CO2 Injection well CDU
Production wells
Albatross
Seabed CO2 Injection Gazwell de France
Production well Reservoir
Investor Day 22 May 2007 100
Prepared by Petrolink as
LPG production
Storage and loading: LNG, LPG, condensate
Other countries positions Ivory Coast: profitable gas production dedicated to a power plant Egypt: one exploration licence and looking for more assets
7
Appendices
Mauritania: LNG or local electricity production ?
Gaz de France Investor Day 22 May 2007 101
Commercial and fiscal aspects
Current gas and oil sales can be split between: • Oil and liquids sold under contracts with a strong link to Brent (adjusted for quality and transportation costs) • Gas sold under: Gas market indexes: NBP, Zeebrugge, TTF Typical continental gas contracts including various fuel indexes and slipping averages
7
Appendices
Tax rates in concession regimes varies for Gaz de France affiliates, between 35-40% and 78% in Norway • Investment incentives in Norway are such that Gaz de France offsets all its revenues against its fiscal deficit
Gaz de France Investor Day 22 May 2007 102
Although volumes sold under gas market indexes increased, long term contracts – continental type – remain dominant
The main fiscal regimes
Production Sharing Contracts can be split into two subcategories where: • E&P companies have rights to a portion of hydrocarbons: production and reserves are already net of tax ("entitlement") • E&P companies have no (physical) rights on hydrocarbons, they receive the financial value of it • Booking of reserves under PSC is less favorable as the entitlement is already net of tax
7
Appendices
Concession regimes: taxation applies mainly to income, there can be special tax rates for E&P activities and royalties • UK, Netherlands, Germany, Norway… • Most of the reserves and production of Gaz de France are under concession regimes, except Ivory Coast (PSC)
Gaz de France Investor Day 22 May 2007 103
Service contracts (or Buy Backs): the E&P company is paid like a service provider and has no access to hydrocarbons: Iran… • Booking of reserves requires a case by case analysis
Reserves - Definition and evaluation of reserves
Reserves are volumes of discovered hydrocarbons estimated to be technically and commercially recoverable
7
Appendices
Oil and gas reserves are based on interpretation of geologic and engineering data available at the time of the estimate
Gaz de France Investor Day 22 May 2007 104
Reserves are estimated under conditions of uncertainties, they are not counted for as a stock of goods Different classification systems and definitions exist
Evaluation according to SPE / WPC guidelines
7
Appendices
Gaz de France evaluates its Proven and Probable (2P) reserves according to the guidelines of: • The Society of Petroleum Engineers (SPE) and • The World Petroleum Congress (WPC)
Gaz de France Investor Day 22 May 2007 105
2P reserves are those quantities of hydrocarbons that are estimated to be recoverable more likely than not • Commercially • From known geologic accumulations • From a given date forward • With existing technologies • Under the economic assumptions of the evaluator (evolution of prices, inflation and exchange rates)
Technical costs per barrel
7
Appendices
A synthetic indicator calculated as follows: • Opex : all expenses related to production, including treatment, transportation and G&A cost related to production • Exploration costs expended (G&G expenses, seismic studies and G&A related cost as well as dry hole cost) • And DD&A (Unit of production depreciation plus abandonment) • Divided by the production of the year
Gaz de France Investor Day 22 May 2007 106
How to understand it: • Numerator includes all stages of projects from exploration to dismantling, it gives a fair view of upstream costs/investments • Denominator reflects only the producing assets, a sudden increase or drop in production will affect it : pluriannual averages are more significant • Vary strongly according to the type of portfolio (large exploration base vs large producing base) and to the growth strategy (acquisition vs exploration)
Benchmark confirms performance
7
Appendices
Comparison of GDF performance with peers, key metrics: • Exploration well success rates • Finding costs • IRR
Gaz de France Investor Day 22 May 2007 107
Survey performed by WoodMackenzie early 2006: • Covers exploration activity of Gaz de France and Peer Group (2000-2004) • Peer Group includes: BG, Marathon, Apache, Repsol-YPF, Wintershall, Norsk Hydro, Total, OMV, DONG, Woodside, Occidental, Amerada, Kerr-McGee, Talisman, RWE-Dea, ENI, ConocoPhilips, Encana • Focus on Europe and North Africa Definitions and methodology: WoodMackenzie
Build growth and create long term value Cumulated value for the Group
CO2 sequestration: convert R&D project into profitable business model
7
Appendices
Storage in depleted fields: new sites made available for the Group
Projects matured internally or integrated in portfolio via acquisition
Exploration portfolio: from mature to frontier areas Contingent resources: fields to be developed in coming years 2P reserves: "cash cows" and fields to be developed
Gaz de France Investor Day 22 May 2007 108
Time line
CO2 sequestration projects Gaz de France involvment SNØHVIT ALTMARK
CO2 injection project Gaz de France partner
K12B
CO2 injection pilot project Gaz de France operator
7
Appendices
Participation to various R&D consortium on CO2 sequestration in depleted fields and deep saline aquifers CO2 injection on going Gaz de France operator
Gaz de France Investor Day 22 May 2007 109
TOUAT CO2 injection project Gaz de France operator
