BP E.on Announcement
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Transcript of BP E.on Announcement
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BP/E.ON Announcement
16thJuly 2001
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This document, and in particular the deal summaries and key
financials, contain certain forward-looking statements, with respectto, inter alia, returns, costs, prices, sales, volumes, value, earnings,synergies, market share and margins. By their nature, forward-
looking statements involve risk and uncertainty because they relate toevents and depend on circumstances that will occur in the future and
are outside the control of BP. Actual results may differ materiallyfrom those expressed in such statements for many reasons includinglevels of industry product supply, demand and pricing, currencyexchange rates, economic growth in relevant countries, successful
partnering, the actions of competitors and other changes to businessconditions. Additional information including information on factorswhich may affect BPs business, is contained in BPs Annual Report
and Accounts for 2000 and in the Annual Report on Form 20 F filed
with US Securities and Exchange Commission.
July 2001
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Lord Browne
Group Chief Execut ive
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Strategy and Opportunity
Subject to Regulatory Approval
Corporate Strategic Fit
Focused strategic resources realise full value of Ruhrgas
Important markets Germany
Valuable brands ARAL
Unique Opportunity Ruhrgas - E.ON views as strategic
BP - accesses leadership position in major market
- accesses material value
High Quality Transaction
Accretive to Group earnings and returns
Acquisition accounting
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Doug FordManaging Director
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Transaction Details
*Subject to Certain adjustments$/ exchange rate 0.86 Subject to Regulatory Approval
BP cash consideration $1.63bn* plus $0.95bn debtcontributes 51% of BPs 25.5% share of Ruhrgas
BP acquires 51% of Veba Oil
E.ON option to Put remaining 49% of Veba Oil after 1Q2002BP option to Put remaining 49% of BPs shares in Ruhrgas after
1Q2002 - BP Pays net cash of $340m
Opens up integration cost synergies of at least $200 million pa
BP review likely to lead to sale of material but non-strategicupstream assetsretaining proceeds with sharing mechanism abovea threshold price
Subject to regulatory approval, expected by early 2002
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Asset Earnings History
0
200
400
600
800
1000
1998 1999 2000
Veba Oil Downstream
& Petrochemicals
Estimated EBITDA $m
1998: BP Estimates, 1999: BP Estimate usingE.ON data, 2000: Audited Data from E.ON
Average 98-00$656m pa
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Asset Earnings History
0
200
400
600
800
1000
1998 1999 2000
Veba Oil Downstream
& Petrochemicals
Estimated EBITDA $m
BP 25.5% Ruhrgas
Operating Dividend
0
100
200
1998 1999 2000
$m Post Tax
1998: BP Estimates, 1999: BP Estimate usingE.ON data, 2000: Audited Data from E.ON
Average 98-00$656m pa
Average 98-00 $70m post tax p.a.
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Asset Earnings History
0
200
400
600
800
1000
1998 1999 2000
Average 98-00$656m pa
Veba Oil Downstream
& Petrochemicals
Estimated EBITDA $m
Veba Oil Upstream
2000 EBITDA $418m
Production 159 mboedProven reserves 604 mmboe
Probable resources 155mmboe
Possible resources 366 mmboe
BP 25.5% Ruhrgas
Operating Dividend
0
100
200
1998 1999 2000
Average 98-00 $70m post tax p.a.
$m Post Tax
1998: BP Estimates, 1999: BP Estimate usingE.ON data, 2000: Audited Data from E.ON
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Downstream StrategyImplementation
Amoco & Arco [ coast to coast #1 in USA
Castrol [ leading global lubricants player
China [ investing for growth in retail
Mobil [ strengthening BP in Europe
Veba Oil
Subject to Regulatory Approval
> 18%
10-18%
< 10%
Market shareBP + Aral
BP Data
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Positioning BP in Europe
0
2
4
68
10
12
14
16
BP pre-Mobil
BP postMobil
BP &Aral
Shell/Dea
TFE Exxon Repsol Agip
Europe Retail
Market Share (%)
BP & Aral Chosen
Markets
# of sites 5,355 8,170 10,975 9,869 9,908 5,089 3,540 1,341
Source: BP & PFC Data Subject to Regulatory Approval
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Marketing Efficiency
Market Leader in Germany
Source: M WV 2000
Subject to Regulatory Approval
Market Efficiency Ratio
Subject to Regulatory Approval
Market Share
0-5% 5-10% 10-15% 15-20% 20-25% 25-30%
High
Low
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Retail Deal impact
0 100 200 300 0 100 200 300
Retailcustomers
Retail volume
Convenience
sales
Numberof sites
Central Europe Europe
BP BP + Aral
Source: BP data, Subject to Regulatory Approval
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Retail Marketing
A leading brand added to the portfolio
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BP & Veba Oil Refinery Interestsin Europe
BP Veba
2000 Throughput
(000bpd)
BP* 1,084Veba Oil** 314
* Adjusted for 100% Mobil
**Veba Oil Share - Accounts 2000
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Deal Summary
BP acquires majority of Veba Oil
BP realises full value of Ruhrgas
BP/Aral fuels market leadership in Germany & Austria
Opens up integration cost synergies of at least$200m pa restructuring costs of $200m over 2years
Estimated to be accretive to Group earnings andreturns in 2002
Subject to Regulatory Approval
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Question & Answer Session
Lord Browne
Group Chief Executive
Doug Ford
Managing Director