CNOOC LIMITED 中国海洋石油有限公司 Acquisition of OPTI Canada

CNOOC LIMITED
中国海洋石油有限公司
Acquisition of OPTI Canada Inc.
July 20, 2011
This presentation includes “forward-looking statements” within the meaning of the United States Private
Securities Litigation Reform Act of 1995, including statements regarding expected future events,
business prospects or financial results. The words “believe,” “intend,” “expect,” “anticipate,” “project,”
“estimate,” “plan,” “predict” and similar expressions are intended to identify such forward-looking
statements.
These statements are based on assumptions and analyses made by us in light of our experience and
our perception of historical trends, current conditions and expected future developments, as well as
other factors we believe are appropriate under the circumstances. However, whether actual results and
developments will meet our expectations and predictions depend on a number of risks and uncertainties
which could cause our actual results, performance and financial condition to differ materially from our
expectations, including those associated with fluctuations in crude oil and natural gas prices, our
exploration or development activities, our capital expenditure requirements, our business strategy, the
highly competitive nature of the oil and natural gas industries, our foreign operations, environmental
liabilities and compliance requirements, and economic and political conditions in the People’s Republic
of China. For a description of these and other risks and uncertainties, please see the documents we file
from time to time with the United States Securities and Exchange Commission, including our 2010
Annual Report on Form 20-F filed on April 29, 2011. Consequently, all of the forward-looking statements
made in this presentation are qualified by these cautionary statements. We cannot assure that the
actual results or developments anticipated by us will be realized or, even if substantially realized, that
they will have the expected effect on us, our business or our operations.
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Key Transaction Terms
A subsidiary of CNOOC Limited (“CNOOC”) will
acquire 100% of OPTI Canada Inc. (“OPTI”) and
will own a 35% working interest in four oil sands
projects located in Alberta, Canada which are
Long Lake, Kinosis, Leismer, and Cottonwood
195 mmbbl of proved reserves(1)
1.8 bnbbl of 2P reserves + 2C resources(1)
100%
~10,000 bbl/d bitumen production at Long Lake(1)
SAGD projects
Existing Upgrader built and operating at the Long Lake site
Total consideration for this transaction
approximately US$2.1 billion
US$1.25 billion in cash paid to acquire 100% of outstanding
second lien debt and common shares of OPTI
US$0.825 billion in assumed first lien debt
35%
65%
Large-scale in situ
Athabasca oil sands
assets:
Long Lake and
Development
Projects
Operator Nexen Inc. (“Nexen”) owns 65% of the
project
Required Approvals
Transaction subject to certain governmental approvals in
addition to the approval of the second lien noteholders and the
approval of the Canadian court
Expected completion in Q4 2011
(1) Working interest in the raw bitumen reserves, resources and production before royalties as
disclosed in OPTI’s disclosure documents filed with securities regulatory authority in Canada.
3
Investment Highlights
Acquisition
complements CNOOC
Limited’s M&A
strategy focused on
resource, risk and
return
Large, long production life resource acquired
Value-driven acquisition
Transaction metrics represent attractive value relative to other Canadian transactions
Oil sands represent one of the largest resource plays in the world
Unique positioning in
Canada’s oil sands
Partnered with
experienced operator,
leading Canadian
energy company
Nexen Inc.
Limited opportunities exist to acquire integrated producing assets, such as Long
Lake
Operator Nexen is highly familiar with the assets, the Canadian industry and
regulatory process and has the existing manpower required to execute the
project
CNOOC’s financial strength and operating experience will further contribute to a
strong partnership
Three as yet undeveloped bitumen assets with established contingent resources
Long-term upside
potential
Over 30 years of bitumen production expected at Long Lake
Evolving oil sands technology allows for incremental returns
4
Disciplined M&A Strategy
Growth strategy
Reserves and
production growth
U.S. Projects
Texas, US
Develop natural gas
{
{
33.3% in Eagle Ford & Niobrara
Consideration: US$1.12 bn & US$ 0.57 bn
Prudent financial policy
Opportunistic
Argentina Bridas Corporation
Value-driven
Return & risk evaluation
„ Resources
„ Return
{
{
20% of PAE
Consideration: US$3.1bn
„ Risk profile
OPTI acquisition is consistent with our value-driven M&A strategy
5
Canadian Oil Sands Resource
Canadian Oil Sands Locations
(billion bbl）
Oil Reserves Comparison
The recoverable reserves of oil in Canada is estimated ~175 billion
barrels, mainly located in Alberta in the form of oil sands
Represents 13% of the world’s total crude oil reserves, ranking
second after Saudi Arabia(1)
80% of the oil sands reserves are recoverable using in situ
technology including SAGD(2)
Oil sands projects have steady production profile of up to 50 years
with no declines
Attractive, stable political and fiscal regimes
Source: EIA.
(1) Energy Information Administration (EIA)
(2) Energy Resources Conservation Board (ERCB)
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OPTI’s Oil Sands Assets
OPTI holds a 35% working interest in each asset (Nexen holds
the remaining 65%) which are operated under Construction,
Ownership and Joint Operating Agreements; Nexen is the
operator
OPTI’s Oil Sands Assets (1)
CNOOC Limited will be responsible for its 35% share of on-going
capital spending
Resource across asset portfolio (OPTI’s interest)
195 million barrels proved reserves(1)
534 million barrels probable reserves(1)
1,100 million barrels Contingent Resources(1)
335 million barrels Prospective Resources(1)
90,944 net acres owned by OPTI
Millions bbls of Bitumen
1,200
1,100 MMbbl (1)
1,000
207 MMbbl
800
729 MMbbl (1)
600
Probable
390 MMbbl
400
200
0
Probable
144 MMbbl
Proved
195 MMbbl
2P Reserves
Cottonwood
Leismer
Kinosis
Long Lake
591 MMbbl
335 MMbbl (1)
152 MMbbl
335 MMbbl
150 MMbbl
Contingent
Resources
Prospective
Resources
(1) Working interest in the raw bitumen reserves, resources and production before royalties as disclosed in OPTI’s
disclosure documents filed with securities regulatory authority in Canada.
Source: OPTI Canada Corporate Presentation June 2011.
7
Long Lake Overview
Integrated SAGD project with
cogeneration facility and upgrader
Operating Upgrader with processing
capacity of 72,000 bbl/d of bitumen
Full Production capacity of ~58,500
bbl/d, primarily Premium Sweet Crude
(PSCTM)
Current production below expectation
Gross bitumen production ~30,000
bbl/d
~90 well pairs
Source: Nexen disclosure
8
Steam Assisted Gravity Drainage (SAGD)
SAGD Process
SAGD Overview
Since first tested in 1984, the SAGD extraction
methodology has improved through long-term use in
commercial operations
The process consists of:
Drilling two parallel wells (a well pair)
Injecting steam into the upper well to heat bitumen
that then flows into the lower well for extraction
Well pairs are drilled from central “pads”
90% of water used is recycled in the process
Challenges with Traditional SAGD
Exposure to volatile natural gas costs
Exposure to light-heavy oil differentials
Exposure to rising diluent costs
Ability to use non-potable water sources
Relatively minimal disturbance to surface lands (less
than conventional drilling due to per well oil recovery)
SAGD assets produce with minimal declines for
decades
Traditional challenges are addressed at
Long Lake by using the proprietary
OrCrudeTM Process
Continued drilling to “fill” surface facilities
Each of the four oil sands asset acquired will be
developed using SAGD technology
Source: OPTI Canada Corporate Presentation June 2011
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Upgrader Enhances SAGD Economics
Long Lake Surface Facilities
Conventional SAGD
Patented OrCrudeTM Process
Steam
Generation
Conventional Refining
Premium
Sweet Crude
Syngas generator
reduces external
natural gas
requirements
ÅSyngas Fuel
Cogeneration
Cogeneration
Reduces exposure to
light-heavy differential
ÅSyngas Fuel
Water Æ
Diluted Bitumen Æ
Separator
Å Recycled Diluent
Reduces need to
purchase expensive
diluents
TM Unit
OrCrudeTM
Asphaltenes Æ
Gasification
Å Hydrogen
Å Steam
Water
Water
Treatment
Treatment
Upgrader
Technology
Address Challenges
of Traditional SAGD
OrCrude Product Æ
(1)
72,000 bbl/d
Upgrader uses proprietary technology
Hydrocracker
Æ
58,500 bbl/d
(1)
(1) at full design capacity
Source: OPTI Canada Corporate Presentation June 2011
10
Getting Long Lake To Full Capacity
Past
Future
Underappreciated complexity of
integrated start-up
Two additional OTSGs on
stream late 2012 (10-15% more
steam)
Lack of independence between
SAGD and Upgrader
Construction of two new pads
in high quality reservoir
underway, steaming in 2012
(108 pairs total)
Focus on cost rather than
resource optimization
Lack of excess well capacity to
fill Upgrader
Existing wells will continue to
ramp up through 2011 and into
2012
Building independence between
SAGD and Upgrader complete
in 2012
Diluent Recovery Unit
Natural gas pipeline
Source: Nexen disclosure
11
Long Lake Economics
Strong netbacks at full production (1)
CDN$/bbl
$100
$80
$76.26
$3.88
$60
$26.78
$98.24
$6.93
Revenue
Royalties & G&A
$28.17
Operating Costs
$63.14
Netback
Annual net cash flow during Long Lake ramp up (3)
$40
$45.60
$20
Self Supplied
Energy(2)
$7.66
Self Supplied
Energy(2)
$10.36
$75 / bbl
$3.75 / mmbtu
$0.96
24% of WTI
$100 / bbl
$5.00 / mmbtu
$1.00
22% of WTI
$0
WTI in US$
Gas in US$
FX US$:CDN$
Heavy/Light Differential
(1) Source: OPTI June 2011 Investor Presentation
(2) Total savings:
WTI US$75: Syngas - $4.13/bbl, Hydrogen - $1.30/bbl, Power - $2.23/bbl
WTI US$100: Syngas - $5.67/bbl, Hydrogen - $1.78/bbl, Power - $2.91/bbl
(3) Source: Nexen disclosure
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Kinosis - Near Term Expansion
Planning 40,000 bbl/d (gross) SAGD
stages for Kinosis
Regulatory approval in place for 140,000
bbl/d (gross) of SAGD production
Current economics favourable for SAGD
expansions
Ability to self-supply diluent
Reserves & Resources (OPTI’s interest)
390 MMbbl 2P Reserves(1)
152 MMbbl Contingent Resources(1)
(1) Working interest in the raw bitumen reserves, resources and production before royalties as disclosed in OPTI’s disclosure documents filed with securities
regulatory authority in Canada.
Source: OPTI June 2011 Investor Presentation
13
Leismer & Cottonwood - Future Expansions
Potential for 216,000 bbl/d (gross) of SAGD production
Leismer
Cottonwood
Leismer & Cottonwood welldelineated with coreholes &
3-D seismic
458 delineation wells on 275
sections
Resources (OPTI’s interest)
798 MMbbl Contingent
Resources(1)
335 MMbbl Prospective
Resources(1)
(1) Working interest in the raw bitumen reserves, resources and production before royalties as disclosed in OPTI’s disclosure documents filed with securities
regulatory authority in Canada.
Source: OPTI June 2011 Investor Presentation
14
Way Forward (Gross Project Capacity)
Current production, near term
expansion and long term growth
100% Interest Daily Bitumen Production
(bbl/d)
500,000
432,000
400,000
Cottonwood
72,000
360,000
300,000
Current Bitumen
Production
Leismer
144,000
216,000
200,000
Kinosis
144,000
72,000
100,000
Long Lake
0
Operating
Regulatory
Approved
Received
Planned
Source: OPTI Canada Corporate Presentation June 2011.
Source: OPTI June 2011 Investor Presentation
15
Contribution to Reserves and Production Growth
CNOOC Limited
Pre-Acquisition(1)
CNOOC Limited
Post-Acquisition
Post-Acquisition(3)
North
America
0.3%
South
America
9.5%
South
America
9.0%
Africa 4.9%
North
America
5.3%
Oceania
3.5%
Rest of Asia
7.3%
Africa 4.6%
Oceania
3.3%
+~159.6
+195
(1)
MMBoe(2)
Rest of Asia
7.0%
Proved
Reserves
increase
by 5.3%
China 70.8%
China 74.6%
Total: 2,995 mmboe
South
America
3.5%
North
America
0.1%
Total: 3,154 mmboe
Africa 7.0%
Oceania
3.0%
Rest of Asia
6.5%
China 79.9%
Total: 900,702 boe/d
(1)
(2)
South
America
3.5%
North
America
1.1%
Africa 6.9%
Oceania
3.0%
+~10,000
+~9,389
boe/d(2)
Rest of Asia
6.4%
Production
increases
by 1.0%
China 79.1%
Total: 910,091 boe/d
CNOOC Limited pre-acquisition reserves as at December 31,2010 and production average 2010 production, both after royalties.
For illustrative purpose, estimated OPTI reserves/production after royalties are calculated based on its reserves/production before royalties as disclosed in OPTI’s disclosure documents filed with
securities regulatory authority in Canada.
16
Selected Transaction Comparables
CNOOC’s acquisition of OPTI
$1.13
17
Closing Remarks
Acquisition complements CNOOC
Limited’s M&A strategy focused on
resource, risk and return
100%
Unique positioning in Canada’s oil sands
Partnered with experienced operator,
leading Canadian energy company Nexen
Inc.
35%
Long-term upside potential
65%
Large-scale in situ
Athabasca oil
sands assets:
Long Lake and
Development
Projects
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http://www.cnoocltd.com