financing in a high cost oil & gas world
TRANSCRIPT
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Financing in a High Cost Oil & Gas World
CHAIR Jan Prins - Member, Advisory Board Energy Intelligence; Former
Managing Director ABN AMRO
Ian Catterall - Head Natural Resources for EMEA
Bank of Tokyo-Mitsubishi UFJ
Todd Levy - President Chevron Europe, Eurasia, Middle EastE&P Company
Mike Powell - Managing Director and Co-Head Oil & Gas, EMEA Barclays
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Source: IEA
World Energy
Investment
Outlook 2014
World USA
Oil & Gas Oil & Gas
Upstream 740 143
Transport 177 26
Refining 77 11
994 180
Increase 46% 76%
Debt Finance 275 47
Average Annual Investment 2014 – 2020
(US $ Bln.)
$ 0
$ 100
$ 200
$ 300
$ 400
$ 500
$ 600
$ 700
$ 800
$ 900
$ 1,000
2000 - 2013 2014 - 2020
Refining
Transport
Upstream
Global Average Annual Investment
(US $ Bln.)
Global Oil & Gas Investments will increase by 50% during the coming years;
In the USA the increase will be more than 75%;
Debt financing needed may increase even more than that given cash flow shortfalls in the oil & gas sector.
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Major energy companies’ cash from operations flattens;
This creates a funding gap between and cash sources and uses;
To be closed by asset sales and debt finance.
0%
20%
40%
60%
80%
100%
2010 2011 2012 2013 2014
Proceedsfrom AssetSales
NetIncreases inDebt
Cash fromOperations
1st Quarter sources of cash for major energy companies.
Major energy companies’ cash from operations and uses of cashBillion, 2014 US dollars, annualized values from Quarterly reports
Source: U.S. Energy Information Agency, July 2014 Jeff Barron. Study based on results 127 global oil and gas companies.
400
450
500
550
600
650
700
2010 2011 2012 2013 2014
Cash from Operations
Uses of Cash:Capex,
Dividends and Share Repurchases
Gap to be closed by Asset Sales and Debt
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0
100
200
300
400
500
600
04/01/2008 04/07/2008 04/01/2009 04/07/2009 04/01/2010 04/07/2010 04/01/2011 04/07/2011 04/01/2012 04/07/2012 04/01/2013 04/07/2013 04/01/2014 04/07/2014
in bps
French Banks Southern European Banks German Banks
UK Banks US Major Banks Japanese Banks
0
100
200
300
400
500
600
04/01/2008 04/07/2008 04/01/2009 04/07/2009 04/01/2010 04/07/2010 04/01/2011 04/07/2011 04/01/2012 04/07/2012 04/01/2013 04/07/2013 04/01/2014 04/07/2014
in bps
French Banks Southern European Banks German Banks
UK Banks US Major Banks Japanese Banks
Banks Liquidity: CDS levels
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$
$ 100
$ 200
$ 300
$ 400
$ 500
$ 600
$ 700
$ 800
$ 900
2010 2011 2012 2013
Oil & Gas Fund Raising (US $ Bln) Equity
BankLoans
ProjectFinance
Bonds
Source:
ThomsonONE/EY
Exploration &
Appraisal
Development &
Production
Portfolio
Expansion
IPO Reserve Based
Lending
Cash from
Operation
Private Equity Public Bonds Bank Loans
Further Issues Project Finance Infrastructure
Funds
Private
Placement
Asset Sales
Principle Sources of Oil & Gas Funding
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