David-Stokes_Timera_EAGC_Nov18

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Challenge B:Portfolio construction123455 trends impacting gasportfolio constructionTrendDecarbonisationRapid growth of LNGPower sector linkageFrom LTCs to tradingRefocusing in supply chainGas portfolio evolution: 4 case studiesShellEquinorUniperEngieExpand & diversify*• Power: acquire retail & generation(e.g. First Utility, Inspire, Axiom)• LNG: expand supply & trading portfolio(e.g. BG, Shell Canada, Hazira India)Rebrand & diversify• Power: 20% capex on renewables by 2030(offshore wind key e.g. Arkona, Dogger Bk)• Trading: expand gas & power trading(e.g. acquisition Danske Commodities)Split & expand• Trading: Expand across regions & markets(e.g. US & coal desk expansion)• LNG: expand supply & trading portfolio(e.g. Woodside/Pavilion deals, DE regas)Divest & refocus• Sales: cut supply chain & regional footprint(e.g. upstream & thermal power sales)• Services: refocus on core infra & services(e.g. grow energy services – Evbox, EPS)*Total following similar strategyEuropean Autumn Gas Conference Nov 20188
Asset valuationChallenge C:Asset investment12345 trends impacting gasasset investmentTrendGas market tighteningLT contract challengeValue shift to promptRisk/ return profile shiftQuantifying asset value requires probabilisticmodelling analysis that captures asset risk/returndistribution and impact of contracting strategy.5 drivers of gas asset valuation1. Utilisation Evolution of supply volumes, routesand flow patterns drive capacity utilisation2. Constraints System constraints, both physical& contractual, drive capacity value premia3. Flex value Interaction between physical assetflex & market price signals drives extrinsic valueEuropean Autumn Gas Conference Nov 20185Buyer competition4. Liquidity access Access to liquid hub pricesignals drives ability to monetise capacity value5. Risk/return Ability to quantify asset risk/returndistributions & price market risk is a keydifferentiator between investors (see diagram)9
Page 1 and 2: European gas marketMarket evolution
Page 3 and 4: Global gas marketis tighteningGloba
Page 5 and 6: bcmaKey driver:Russian flowsRussian
Page 7: New modelOld modelChallenge A:Value

David-Stokes_Timera_EAGC_Nov18

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