Transcript Shell Trading - Wyoming Pipeline Authority

Coral Energy / Shell Trading
Producer Services
Wyoming Pipeline Authority
October 28, 2003
Overview
 Coral Energy / Shell Trading is Royal Dutch Shell’s (“RD
Shell”) North American natural gas and power marketing
affiliate (RD Shell ownership @ 90.8%)
 Coral is contractually obligated to purchase RD Shell’s 2.4
Bcfd of North American natural gas production
 Coral is headquartered in Houston with offices in San
Diego and Calgary
 Shell Trading markets 9.5 Bcfd of natural gas and 15 GWs
of power
 Coral is rated A- by S&P and A1 by Moody’s
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Overview
 Coral’s core competencies are in the aggregation,
marketing and price risk management of natural gas
 We have developed the infra-structure, expertise and
experience in operations and marketing to meet our
contractual obligations to RD Shell
 We leverage those resources and capabilities to provide a
cost-effective market alternative to E&P companies
 Including a comprehensive suite of services allowing
Producers to focus their resources on E&P activities
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Background
 RD Shell sought to reduce its cost structure and credit risk,
maintain high production capacity factors and focus more
resources on E&P activities
 Through Coral, RD Shell out-sourced its North American
natural gas marketing functions:
 Coral is contractually obligated to purchase all of RD Shell’s
North American gas production at competitive prices
 RD Shell realizes substantial cost reductions improving
profitability
 Credit risk is effectively transferred to and managed by Coral
 High production capacity factors are maintained
 More resources are available for E&P activities
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Discussion
 Significant infra-structure and resources are required to
effectively market natural gas
 These marketing efforts require substantial resources that
could otherwise be available for E&P activities
 We believe the primary goals of a Producer’s marketing
efforts are to:
 Sell every MMBtu produced
 Receive a competitive price
 Get paid
 As well, the high capacity factor required in producing
fields is not well matched to the load profiles of markets
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Discussion
 Without significant investment in storage and transport assets,
Producer’s are limited in their ability to shape production to meet
market load profiles
 Further, Producer’s have substantial credit risk through their
marketing efforts or require substantial back-office support to
mitigate those risks
 As such, and in our opinion, few Producers have sufficient scale
and scope to support an effective marketing effort
 For these reasons, aggregating production to a financially strong
counter party:
 Leverages core competencies
 Reduces costs
 Mitigates credit risk exposure
 Increases profitability
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Producer Services
 Why Coral Energy / Shell Trading?
 Scale & Scope: Coral markets 9.5 Bcfd in North
America
 Geographic reach
 Infra-structure, experience & capability
 Marketing, Asset Management and Price Risk
Management are core competencies
 Comprehensive Service Offering
 Strong balance sheet and credit rating
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Producer Services
Shell Trading Offers Marketing Services that:
 Are comprehensive and flexible
 Are cost-effective
 Focus on maintaining or increasing production capacity
factors
 Eliminate credit and non-payment exposure
 Lever core competencies
 Involve transparent, competitive prices
 Facilitate price risk management
 Reduce costs, enhancing profitability
 Support an increased focus on E&P activity
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Contacts
 Contacts
Laird Dyer (858.320.1536)
Bill Lyons (858.526.2155)
Erin Kenney (858.526.2116)
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