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- 1. Goldman Sachs – Houston 3/25/08 1 Goldman Sachs Houston, March 25, 2008 Praxair, Inc. Chuck McConnell Vice President Gasification and Clean Coal Technologies Praxair, Inc. Chuck McConnell Vice President Gasification and Clean Coal Technologies
- 2. Goldman Sachs – Houston 3/25/08 2 This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s reasonable expectations and assumptions as of the date the statements are made but involve risks and uncertainties. These risks and uncertainties include, without limitation: the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances; changes in foreign currencies and in interest rates; the cost and availability of electric power, natural gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events including natural disasters, epidemics and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of tax, environmental, home healthcare and other legislation and government regulation in jurisdictions in which the company operates; the cost and outcomes of litigation and regulatory agency actions; continued timely development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; and the effectiveness and speed of integrating new acquisitions into the business. These risks and uncertainties may cause actual future results or circumstances to differ materially from the projections or estimates contained in the forward-looking statements. The company assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances. The above listed risks and uncertainties are further described in Item 1A (Risk Factors) in the company’s latest Annual Report on Form 10-K filed with the SEC which should be reviewed carefully. Please consider the company’s forward-looking statements in light of those risks. Forward Looking Statement
- 3. Goldman Sachs – Houston 3/25/08 3 Secular Growth Drivers Environment Emerging economies Energy Indexed EPS Unique Revenue Model Dedicated supply systems Long term contracts High ROC and cash flow Steady and non-cyclical earnings growthSteady and non-cyclical earnings growth Recession A Growth Company for All Seasons 1992 1995 1998 2001 2004 2007 18% CAGR 9% CAGR Praxair S&P 500
- 4. Goldman Sachs – Houston 3/25/08 4 Organic Sales Annual Growth 8 - 12% Operating Profit EPS 10 - 14% 12 - 16% Long-Term Growth Outlook Annual Sales Growth 8-12% Applications Technology Base Business 4-6% 2-3% 2-3% New Projects
- 5. Goldman Sachs – Houston 3/25/08 5 GeographiesEnd Markets 2007 Sales $9.4 Billion Aerospace 3% Manufacturing 23% Energy 11% Electronics 8%Other 11% Healthcare 11% Metals 16% Chemicals 10% Food & Beverage 7% Diverse End Markets and Geographies United States 41% Canada 9% Mexico 5% Europe 14% South America 17% Asia 8% PST 6%
- 6. Goldman Sachs – Houston 3/25/08 6 Increasing backlog supports future revenue growth 2001 24 26 Backlog Proposals 35 63 Backlog Proposals 2006 42 Backlog Proposals 2007 82 Project Activity Energy and emerging markets driving record activity
- 7. Goldman Sachs – Houston 3/25/08 7 Growing Environmental Applications Oxygen aeration and ozone sludge reduction Cryogenic condensation for solvent recovery Reduced NOx and CO2 emissions Wastewater Treatment Air Emission Control Oxy-fuel Combustion New applications drive growth at a multiple of IP
- 8. Goldman Sachs – Houston 3/25/08 8 Brazil Market Share Air Liquide Air Products Others Linde Praxair Source: Company reports #1 supplier - unrivalled network 2007 Sales $1.6 B South America Colombia Brazil Argentina Peru Chile Bolivia Strong growth forecasted – On-site projects for capital goods, metals, energy, and petrochem investment – Growing middle class drives domestic economy
- 9. Goldman Sachs – Houston 3/25/08 9 100 Shanghai Nanjing Guangzhou Beijing Tianjin Nanhai Qingdao Praxair plantPraxair plant *2007 Combined sales Sales of $320MM* growing ~20% annually Growing in China Integrated business, diversified markets Rapidly growing liquid market High margin specialty gases Significant on-site opportunities in gasification, metals and electronics Expanding engineering capabilities
- 10. Goldman Sachs – Houston 3/25/08 10 Domestic demand growing –Petrochem, pharma, automotive, metals Captive users moving to purchased product Application technologies Strong project pipeline Global engineering center Praxair #1 position $150MM business growing ~25% per year Rapid Growth in India Praxair ASUs Existing Recent Wins
- 11. Goldman Sachs – Houston 3/25/08 11 Praxair Mexico Sales of $500 MM growing 15% per year ASU CO2 Plants Packaged Export manufacturing economy, strong domestic demand growth Most efficient production and distribution network Growth from energy markets – EOR – Oil well services Acquisition of Linde Mexico – Significant revenue and cost synergies
- 12. Goldman Sachs – Houston 3/25/08 12 High fossil fuel prices, pollution reduction, and climate change create opportunities for industrial gas Applications for industrial gases and technology – Enhanced oil recovery – Oil Sands – Global hydrogen for refining – Gasification – Oxy-coal combustion – CO2 capture and sequestration Energy opportunities driving growth Praxair Integrated Energy Strategy
- 13. Goldman Sachs – Houston 3/25/08 13 Crude Oil Power Plant Coal Pet Coke Refinery Gasification Power Chemicals The Energy Value Chain
- 14. Goldman Sachs – Houston 3/25/08 14 Strong demand for hydrogen expected to continue Demand growth from: – Fuel emission standards – Heavy sour crude – Growing diesel demand Current growth – North America Future growth – Canadian oil sands – Emerging markets Hydrogen for Refining 2007 2010 2015F Praxair Hydrogen Sales 17% CAGR Contracted $3,000 $840 $1,600 ($ MM) Assumes $7.50 nat gas
- 15. Goldman Sachs – Houston 3/25/08 15 Pipeline enclaves deliver superior growth at higher returns Extensive infrastructure in US Gulf Coast serving 85% of US refining capacity – Only commercially available hydrogen storage cavern Northern CA system on-line in 2010 Hydrogen Pipeline Enclaves Multiple growth opportunitiesMultiple growth opportunities
- 16. Goldman Sachs – Houston 3/25/08 16 Numerous large projects under development requiring H2 for upgrading Pipeline located near proposed projects Oxygen, nitrogen and services also required for construction and ongoing operations Refineries expanding in the US to process heavy crude Significant future H2, O2 and N2 opportunitiesSignificant future H2, O2 and N2 opportunities Redwater Scotford Fort Saskatchewan North Saskatchewan River Praxair Edmonton Pipeline System Canadian Oil Sands
- 17. Goldman Sachs – Houston 3/25/08 17 Interest in EOR is increasing globally N2 or CO2 injection in large quantities at high pressure Tertiary recovery can enable incremental production of 10% to 30% Oil prices above $35 support EOR – price expected to remain elevated Huge global market potential 296 Prospective Fields North America 140 South America 52 Europe 13 Asia 43 Middle East 48 PX estimates Oil N2 Oil Enhanced Oil Recovery
- 18. Goldman Sachs – Houston 3/25/08 18 Coal/ Petcoke CO2 H2 Gasifier CO Power Steam Economic drivers: – Lower cost chemical feedstocks – Nat gas price and availability – Energy independence (China) Currently viable in China – SOPO 3000 TPD O2 plant on- stream in 2009 for acetic acid Multiple projects under consideration Viability is a function of scarce natural gasViability is a function of scarce natural gas Air Separation Unit Air O2 Gasification - Coal to Chemicals
- 19. Goldman Sachs – Houston 3/25/08 19 Viability contingent on material CO2 legislationViability contingent on material CO2 legislation Capital cost > $ 2 Billion Praxair scope potential: – Large ASU – CO2 separation technology – Capture compression and underground injection Coal Air Separation Unit Air O2 Power, 600 MW CO2 capture, compression and sequestration (6,000 TPD) Gasifier Integrated Gasification Combined Cycle (IGCC)
- 20. Goldman Sachs – Houston 3/25/08 20 Flue Gas Power Plant Coal Power, 600 MW 85% pure CO2 Capture, compression and sequestration Air Separation Unit Air O2 (12,000 TPD) Oxy-coal emerging as a favored technology for CO2 captureOxy-coal emerging as a favored technology for CO2 capture 90% reduction in CO2 emissions vs. traditional coal combustion Alliance with Foster Wheeler for clean-coal technologies Praxair demonstration projects – Jamestown, NY – El Bierzo, Spain Oxy-Coal CO2 Capture and Sequestration
- 21. Goldman Sachs – Houston 3/25/08 21 CO2 capture, separation and compression CO2 transport CO2 sequestration SMR, IGCC or PC power plant EOR Oxy-coal combustion technology Global leader in CO2 –90 plants worldwide CO2 capture technologies –Separation, purification Enhanced Oil Recovery –Gulf Coast Carbon Center 4 DOE regional partnerships Praxair Seeper Trace TM –CO2 monitoring/detection Praxair Strengths Praxair is uniquely positioned to provide enabling technologies CO2 injection CO2 Capture and Sequestration
- 22. Goldman Sachs – Houston 3/25/08 22 Advanced coal-based systems that employ CCS* Plant site geology suitable for CO2 storage Projects with secure financials Project timing on a fast track World class technology development and project execution team Regulatory roadmap will provide clarityRegulatory roadmap will provide clarity *Carbon capture and storage Advanced Integrated Dual-Oxidant CFB Power Plant with CCS @Jamestown, NY Oxy-Coal Demonstration Project Success Factors