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Retail Competition: What will it cost Mark Dickin, Manager Retail Energy Solutions, Nexen

Nexen Inc. Canada's fourth largest independent oil and gas producerOil-weighted => 80% oil production and 20% natural gas productionMarket capitalization = US$3.5 billionChemical division => 3rd largest Sodium Chlorate producer in the world7.23% ownership of Syncrude. Global Exploration

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Retail Competition: What will it cost Mark Dickin, Manager Retail Energy Solutions, Nexen

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    1. Retail Competition: What will it cost? Mark Dickin, Manager Retail Energy Solutions, Nexen October 24, 2003

    2. Nexen Inc Canada’s fourth largest independent oil and gas producer Oil-weighted => 80% oil production and 20% natural gas production Market capitalization = US$3.5 billion Chemical division => 3rd largest Sodium Chlorate producer in the world 7.23% ownership of Syncrude

    3. Global Exploration & Production Company Nexen is an international company headquartered in Canada. We operate core production in three countries - Yemen, the U.S. Gulf of Mexico, and Canada, but are also active in Australia, Nigeria and Colombia. Our core operations continue to deliver steady production growth. In 2002, we plan to invest about US $800 million (Cdn $1.24 billion) in oil, gas and chemicals projects that target short, medium and long-term growth. Total oil and gas investment will be US $730 million (Cdn $1.16 billion), with 80% of this amount dedicated to development projects which will add production in 2002 and beyond. Nexen is an international company headquartered in Canada. We operate core production in three countries - Yemen, the U.S. Gulf of Mexico, and Canada, but are also active in Australia, Nigeria and Colombia. Our core operations continue to deliver steady production growth. In 2002, we plan to invest about US $800 million (Cdn $1.24 billion) in oil, gas and chemicals projects that target short, medium and long-term growth. Total oil and gas investment will be US $730 million (Cdn $1.16 billion), with 80% of this amount dedicated to development projects which will add production in 2002 and beyond.

    4. Nexen Marketing One of the largest Producer Marketers in Canada Market > 3.0 bcf/d Natural Gas 450,000 bopd Crude Oil Marketing Worldwide 50% ownership of Balzac Power Station 106 MW combined-cycle Offer power & gas retail services to large commercial & small industrials

    5. What Will it Cost? What does this mean? What does it cost to be a customer? Or What does it cost to be a retailer? Well, let’s look at both

    6. What Does it Cost to be a Customer? Or Toto, I don’t think that we’re in Kansas anymore Who do I want to do business with? What product works for me? What is my risk tolerance? How much do I want to pay? Why do I have to post credit What is mark to market? What is a collateral call?

    7. What Does it Cost to be a Retailer? Some suggest a customer base of 1MM required to meet required economics. Who do I want to do business with? What products do I need to carry? What is my risk tolerance? How much do I want to pay? Why do I have to post credit What is mark to market? What is a collateral call?

    8. What Does it Cost to be a Retailer? Systems Development Credit Costs (Prudential requirement) Call Centre Image

    9. Ontario Utility Bill

    10. Ontario Retail Bill

    11. Cost vs. Benefit Costs Deregulated Market is challenging to customers Education required Homework required Deregulated Market is challenging to Retailers Multiple systems Different regulations Financial burden

    12. Cost vs. Benefit Benefits from Competition... Drives margins (not prices) down Creates healthy markets (only the fittest survive) Price signals trigger new generation Customers are aware of issues

    13. ENERGY TO OUTPERFORM

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