Commonwealth Bank

Report
The Australian Oil & Gas Industry
Grant Willis
Global Head of Natural Resources
January 2014
This presentation does not constitute an offer to provide finance on any terms. The provision of any such offer is subject to formal review and credit approval, satisfactory due diligence, sign off by
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formal documentation is signed. That final documentation may not necessarily mirror the contents of this presentation and any actions you may choose to take should not be taken in reliance on
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The information contained herein is confidential and is the proprietary structure of the Commonwealth Bank. It is provided on the basis that you will not disclose its contents to any
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© Copyright Commonwealth Bank Australia
2
The Commonwealth Bank of Australia
Australia’s largest bank by market capitalisation
KEY FINANCIALS
Statutory NPAT
Cash NPAT
Return on equity
Total assets
14.6m
3,000
Customers
Institutional Clients
 Industry specialisation and
understanding make the Bank an ideal
partner providing balance sheet strength
and broad product capability
Cash earnings per share
Dividend per share
Basel III CET1 (International)
LIQUIDITY (AUD)
 Oil & Gas industry teams placed in key
commercial and financing hubs. CBA is a
Bank that actively deploys balance sheet
into our client’s businesses
 Broad range of debt products spanning
project, corporate and acquisition finance
 Strong global financial markets
capabilities across commodities, foreign
currency and interest rates
 The only domestic Australian bank with a
full in-house equity business, focused on
retail and institutional clients
$101b
June
2011
$135b
June
2012
$137b
June
2013
CREDIT RATING
A$7,677m
A$7,819m
18.4%
A$754b
A$4.86
A$3.64
Moody’s
Fitch
Market
Capitalisation
(US$bn)
Global Market
Capitalisation
Ranking
Senior Debt Rating
Moody’s
S&P
268.02
1
A2
A+
243.52
2
A3
A
232.44
4
Aa3
A+
198.11
6
Baa2
A-
183.81
7
Baa2
A-
124.01
10
Aa2
AA-
104.29
15
Aa3
AA-
92.91
18
Baa1
A-
S&P
11.0%
GLOBAL COMPARISON
Source: Bloomberg. As at 13 January 2014. Credit rating: S&P
3
The Growing Commonwealth Bank of Australia
The Bank provides Natural Resources and product specialists across the globe
New York office
Houston office
United States
Canada
London office
UK
Norway
The Netherlands
Eastern Europe
Africa
Singapore office
Hong Kong office
East & SE Asia
Sydney office
Australia
New Zealand
East & SE Asia
4
Commonwealth Bank of Australia – Products and Clients
Cash & Treasury Management
Payables & Procurement
Foreign Currency Accounts
Trade Finance
CommBiz
Term Deposits
Commodities Sales & Trading
Structured Commodity Finance
Structured Investments
Interest Rates
FX
Transaction
Banking
Financial
Markets
Capital Raising
Working Capital
Acquisition & Bridge Finance
Project & Development Finance
Corporate & Structured Asset Finance
Equity & Debt Capital Markets
5
Australian Economy – Outlook
CBA’s Global Outlook
2013 (a)
2014 (f)
2015 (f)
AUD/USD
0.94
0.91
0.90
EUR/USD
1.34
1.32
1.305
GBP/USD
1.63
1.62
1.54
Reserve Bank of Australia (RBA)
2.50%
2.56%
3.00%
US Federal Reserve (Fed)
0.25%
0.25%
0.75%
European Central Bank (ECB)
0.25%
0.25%
0.25%
People's Bank of China - Benchmark 1 Year Lending Rate
6.00%
6.00%
6.00%
WTI
98.00
91.00
94.00
Brent
109.00
99.00
97.00
Global
Australia
GDP Growth (% YoY)
USA
China
Eurozone
FX
Base Interest Rate
Oil (USD/bbl)
Growth Rate (%)
2010 (a)
2011 (a)
2012 (a)
10
8
6
4
2
0
-2
6
Natural Resources Economic Data
AUD / USD EXCHANGE RATE
USD
1.20
Source: CBA
1.00
0.80
0.60
0.40
0.20
0.00
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
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Global Listed E&P Stocks
Where does Australia stand?
Market Capitalisation of Global E&P Stocks
# of Stocks
% of
Stocks
Mkt. Cap
(USDbn)
% of Total
Mkt Cap
Median
(USDm)
Global
Revenue
(USDm)
% of Global
Revenue
Global
1052
100%
1231
100%
34
471
100%
US
335
32%
608
49%
34
240
51%
Canada
347
33%
185
15%
17
58
12%
Europe (incl UK)
139
13%
136
11%
80
28
6%
Asia Pac (ex AU)
55
5%
226
18%
297
121
26%
Australia
136
13%
67
5%
20
13
3%
Source: CBA and Bloomberg
8
Australian E&Ps by Market Capitalisation (AUDm)
$31,514
14,000
$13,515
12,000
$10,895
10,000
8,000
6,000
4,000
$1,796
2,000
$1,266
$913
$767
$687
$618
$575
AWE
Limited
Drillsearch
Energy
Buru
Energy
$482
$436
$307
$220
$153
Sundance Horizon Oil
Energy
Roc Oil
Maverick
Drilling
Red Fork
Energy
ASIA
ASIA
0
Woodside
Energy
Santos
Oil Search
Beach
Energy
Aurora Oil Karoon Gas
& Gas
Senex
Energy
ASIA
Source: CBA and Bloomberg
9
Recent Unconventional Gas Farm-ins
Are attracting a roll call of international majors
/
/
/
Amount
$156m
Acres
Amount
$70m
Acres
4.0m
EV / Acre
17.6
Date
Amount
EV / Acre
May-2011
Prelude FLNG
20.3
Date
Date
Ichthys
7.7m
EV / Acre
Acres
Darwin LNG
/
Canning
Acres
1.9m
EV / Acre
6.2
Date
Gorgon
NW Shelf LNG
Georgina
Wheatstone
Date
APLNG, Arrow LNG, GLNG and
QCLNG,
May-2012
/
Cooper
Arckaringa
Maryborough
Officer
Amount
$111m
Acres
14.4
Date
Perth
Gunnedah /
Sydney
Acres
EV / Acre
Date
$50m
Acres
3.3m
15.0
Date
Dec-2010
Sep-2011
/
/
/
Amount
Amount
EV / Acre
7.7m
EV / Acre
22.9
Jun-2012
Galilee
Amadeus
/
$210m
9.1m
EV / Acre
Pluto
Acres
37.3
Nov-2012
Amount
Browse LNG
$12m
4.1m
Beetaloo
Dec-2011
Amount
$152m
Amount
$32.2m
5.5m
5.9
Uncovered natural gas pipelines
Full regulation pipelines
Light regulation pipelines
Acres
EV / Acre
Date
$349m
0.4m
904.1
Feb-2013
Otway
Amount
Gippsland
$101m
Acres
0.4m
EV / Acre
268.6
Date
Jul-2011
Nov-2013
Source: Relevant company announcements
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Putting the Australian opportunity in context
United States of America
3.79 million mi2
24.37 Tcf/yr
Australia
2.97 million mi2
2.09 Tcf/yr
Land Area
Natural Gas Demand
(Net Imports 1.94 Tcf/yr)
2,203 Tcf1
$10
$3
(Net Exports 1.0 Tcf/yr)
Gas Resource Potential
Gas Prices (US$/MMBtu)
820 Tcf2
$5
$9
Ability to Deliver
Rigs
Wells
Processing(3)
Pipelines (mi)
US
1,800
37,000
600
350,000
AUS
50
1,200
25
20,000
1. Technically recoverable resources
2. Total demonstrated gas resources
3. Number of plants
Source : EIA Independent Statistics & Analysis, EIA Annual Energy Review 2011 , BREE 2012 Gas Resource Assessment, Energy Quest and Santos analysis
11
Australian Exploration Activity and Expenditure
4,500
4,000
120
3,500
100
3,000
80
2,500
60
2,000
1,500
AUD milllon
No. of Wells Spudded / Metres Drilled (000's)
140
40
1,000
20
500
0
0
2000
2001
2002
2003
Wells Spudded Onshore (LHS)
2004
2005
2006
2007
2008
2009
Wells Spudded Offshore (LHS)
2010
2011
2012
Expenditure (RHS)
Source: APPEA
12
Historical Oil & Gas Production
Historical Australian Oil & Gas Production
Gas Production (bcf)
2,000
1,500
1,000
500
Liquid Prouction
(mmbbl)
0
300
250
200
150
1998
1999
2000
LNG
2001
2002
2003
2004
Domestic Conventional Gas
2005
2006
Domestic CSG
2007
2008
2009
2010
2011
2012
Liquids
Source: APPEA
13
LNG Exports – by country
Australian LNG Exports to Exceed 78 mtpa by 2020
400 Mtpa
Qatar
Malaysia
Australia
Indonesia
Nigeria
United States
Canada
Mozambique
Other
350 Mtpa
300 Mtpa
250 Mtpa
200 Mtpa
150 Mtpa
100 Mtpa
50 Mtpa
0 Mtpa
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
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Australian & Papua New Guinean LNG Projects
Darwin LNG (O)
ConocoPhillips
Sunrise (P)
Woodside
PNG LNG (C)
ExxonMobil / Oil Search/
Santos
Ichthys (C)
INPEX / Total
Liquid Niugini Gas (Elk 1&2) (P)
InterOil / Total
Prelude (C)
Shell
APLNG (C)
Australia Pacific LNG
ConocoPhillips / Origin
Energy / Sinopec
Browse (P)
Woodside
Gorgon (C)
Chevron
Scarborough FLNG (P)
ExxonMobil / BHP
GLNG (C)
GLNG Santos / Petronas /
Total
Bonaparte FLNG (P)
Santos / GDF SUEZ
QCLNG (C)
BG Group
Wheatstone (C)
Chevron / Apache
Arrow LNG (P)
Shell / Petro China
NWSV Trains 1-5 (O)
Woodside
Pluto (O)
Woodside
Offshore Conventional Gas to LNG Projects
Coal Seam Gas to LNG Projects
Onshore Conventional Gas to LNG Projects
(P) Proposed
(C) Construction
(O) Operating
Source: WorleyParsons, CBA
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Case Study: Ichthys LNG Project
Principal Project Components
• USD34bn capex budget
• The upstream facilities comprise around 50 subsea production wells and
subsea production systems connected to a Semi-sub central processing
facility and FPSO
• Gas will be transported to the LNG plant at Darwin via an 889km, 42” subsea pipeline
• Once transported to Darwin the gas will be processed at the onshore LNG
Facilities.
• The project is designed to produce approximately 8.4mtpa of LNG from two
trains, up to 100,000 bpd of field and plant condensate and up to 1.6mtpa
of LPG at peak, with First LNG is scheduled for 2016
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Conclusions
 The future of Australian oil & gas is bright.
 CBA remains committed to the sector.
 Oil prices remain high against historical, domestic gas
prices are rising – the economic settings are stable.
 The conventional gas fields in central Australia are
enjoying a renaissance.
 7 LNG projects will shortly begin producing in 2014
and ramp up into 2017.
 International players continue to invest and support
the Australian oil & gas industry.
 We could do with finding some more oil though.
Ichthys LNG Project – Project Financing
Largest ever project financing transaction
Inpex (Japan) and Total SA (France)
are the major partners in the Ichthys
LNG project which raised USD20bn
of project financing and reached
financial close in January 2013
CBA is the largest non-Japanese
lender
CBA is the Intercreditor Agent and
Uncovered Sub-Facility Agent
Largest Project Finance Deal

Project sponsor engagement with Export Credit Agencies (ECA) commenced during 2010
– over two years ahead of financial close

The financing process commenced in November 2011 when lenders provided preliminary
RFPs. Banks provided final credit approvals in June 2012 and Financial Close was
reached in January 2013, eight months after receipt of the formal RFP

Significant debt amount – USD20bn the largest ever project financing

Multi-lender engagement strategy (ECAs, banks and sponsor debt, and provision for
bonds)

Banks lent USD10.2bn to the project (USD4.8bn Uncovered (47%) and $5.4bn (53%)
Covered)

Ichthys LNG Project
USD20bn
Ichthys LNG Project
USD20bn
MLAB Commercial Bank
Facility
Intercreditor & Uncovered
Sub-Facility Agent
December 2012
Asia Pacific
Deal of the
Year
The project has a number of attractions and some challenges to lenders:

December 2012
Global Deal of the
Year
Asia-Pacific
Multi-sourced
Deal of the Year
3 ECAs directly lent USD5.8bn, and Sponsors provided loans of USD4bn
Strategically aligned Sponsors group (Inpex 66%, Total 30%), with Total being a well
credentialed LNG developer and operator

The liquids rich conventional gas resource delivers strong project economics

Committed off-take arrangements from ten buyers, 68% going to Japanese buyers,
Sponsors buying 21%

Robust project finance structure with contracted senior sponsor support in various forms
21

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