Rosneft · RUS:ROSN
Rosneft — Rosneft Oil Company — Q3 2019 Earnings Presentation
26 slides from Rosneft's earnings presentation, Nov 6, 2019
Slide 1: Rosneft Oil Company IFRS Results Q3 2019
Rosneft Oil Company IFRS Results Q3 2019 November 6, 2019
Slide 2: Important Notice
Important Notice Information herein has been prepared by the Company. The presented conclusions are based on the general information collected as of the date hereof and can be amended without any additional notice. The Company relies on the information obtained from the sources which it deems credib
Slide 3: Improving Rosneft's Investment Case through Effective ESG Communications
Improving Rosneft’s Investment Case through Effective ESG Communications On December 20, 2018 the Board of Directors approved Rosneft strategy related to commitment to the 17 Sustainable Development Goals of the United Nations1 Rosneft has determined five goals of strategic priority, directly suppor
Slide 4: Responsible Business is the Company's Core Value
Responsible Business is the Company’s Core Value «Rosneft-2022» «The Guidelines for Strategy: enter the The Energy Saving Innovative «Rosneft-2022» The social sphere Methane Emission first quartile of Program in force Development Strategy: investments Reduction in Natural international oil and since
Slide 5: Navigating OPEC+ Environment
Navigating OPEC+ Environment Crude oil and condensate production in Russia Brent price 5.0 mmbpd 11.6 90 $/bbl ‘000 Rub/bbl 6 total Russia (RHS) Rub Rosneft (LHS) $ entry level for the production cut production losses (constraints on supplies) 4.8 11.2 75 5 production level after the OPEC+ restricti
Slide 6: Production Dynamics
Production Dynamics Hydrocarbon production 9M 2019 vs 9M 2018 kboed 41 (46) 41 Robust development of major greenfields (Kondinskoe, Srednebotuobinskoe, Yurubcheno-Tokhomskoe, Russkoe, E. Messoyakha) Production ramp up at other brownfields (Samara, Nyagan, Varyoganneftegas) +0.6% 5,783 Rapid de
Slide 7: Vostok Oil – the New Oil Province
Vostok Oil – the New Oil Province in the North of the Krasnoyarsk Region Strong government support Strategically important new production area to satisfy growing East-Taymyr Khatanga future global oil demand E&A licenses Dikson Tax incentives providing investors JV with BP - “Ermak” Bay “North” with
Slide 8: Refining
Refining Refining margins Refining economics in Q3 2019 Россия Russia 1 Европа Europe $/bbl Refining margin in Q3 2019 exceeded the Q2 level mainly due to positive macro including falling Brent and growing wholesale gasoline prices 9.23 7.62 7.78 Growing refining margins in Germany following cra
Slide 9: Focus on Distribution Channels Development
Focus on Distribution Channels Development Netbacks for the main crude oil marketing channels Crude oil marketing breakdown Нетбэк Export,экспорта Asia в направлении Азии Export, Нетбэк Europe экспорта в направлении Европы mmt Нетбэк переработка Refining in Russia Нетбэк вн.рынок Domestic market 430
Slide 10: Earnings Growth
Earnings Growth EBITDA Q3 vs Q2 2019 Rub bn (2) 14 4 6 (17) 7 42 (4) (11) 554 (2) 2 515 External factors: Internal and seasonal factors: Rub -15 bn; -2.1% Rub +54 bn; +10.6% Q2 2019 Exchange rate Excess profit tax Export duty Crude oil price Share in profits of Export duty lag Other taxes Number of
Slide 11: Efficient Cost Control
Efficient Cost Control Lifting costs Refining costs in Russia Rub/boe Quarter Average LTM % YoY Rub/bbl Quarter Average LTM % YoY 202 201 215 213 206 191 195 203 183 193 205 180 23.8% 12.0% 8.9% 5.4% 5.7% 6.7% 6.1% 2.1% 3.0% 0.0% Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q3 2018 Q4 2018 Q1 2019 Q2 201
Slide 12: CAPEX
CAPEX CAPEX Rub bn 9M 2019 CAPEX was Rub 634 bn, down 7% YoY following drilling program optimization aimed at horizontal wells share increase to improve brownfields efficiency 936 CAPEX program priorities: 922 maintaining stable production at brownfields through successful drilling and wellwor
Slide 13: Sustainable Free Cash Flow Generation
Sustainable Free Cash Flow Generation Free cash flow and crude oil price (LTM) FCF, Rub bn 4.50 4.38 4.48 Uras, '000 Rub/bbl 4.25 4.15 3.68 1,133 1,188 1,102 3.26 916 874 422 286 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Free cash flow calculation (9M 2019) Rub bn 67 (116) 56 89 122 26
Slide 14: Financial Stability
Financial Stability Debt evolution Reimbursement of prepayments received Cash, cash equivalents and liquid financial assets $ bn $ bn Reclassification Net debt IFRS 16 effect Net debt/EBITDA Principal amount 2.1 1.7 +2,0 1.5 1.4 1.5 1.1 1.2 71.9 69.7 59.7 63.2 15.5 57.6 59.5 19.6 16.7 44.8 22.1 12.9
Slide 15: Appendix
Appendix
Slide 16: Key Operational Highlights
Key Operational Highlights Indicator Q3 19 Q2 19 % 9M 19 9M 18 % Hydrocarbon production, incl. 5,740 5,710 0.5% 5,783 5,747 0.6% kboed Liquids 4,661 4,618 0.9% 4,674 4,633 0.9% kbpd Gas 1,079 1,092 1,109 1,114 (1.2)% (0.4)% kboed Oil refining 30.07 24.96 20.5% 81.90 85.51 (4.2)% mmt Product output i
Slide 17: Key Financial Highlights
Key Financial Highlights Indicator Q3 19 Q2 19 % 9M 19 9M 18 % EBITDA, Rub bn 554 515 7.6% 1,617 1,593 1.5% Net Income, Rub bn 225 194 16.0% 550 440 25.0% attributable to Rosneft shareholders Adjusted net income1, Rub bn 262 230 14.0% 733 644 14.0% attributable to Rosneft shareholders Adjusted opera
Slide 18: Projects Launched in 2016–2017
Projects Launched in 2016–2017 Indicator Suzun E. Messoyakha2 Location Krasnoyarsk Territory Yamal-Nenets Autonomous District 3Р PRMS reserves1 82 mmtoe / 623 mmboe 248 mmtoe / 1,707 mmboe Commissioning year 2016 2016 Production in 2018 / 9M 2019 4.1 / 2.0 mmt 4.5 / 4.0 mmt Oil production plateau4 >
Slide 19: Projects Launched in 2018
Projects Launched in 2018 Indicator Tagul field Taas-Yuryakh (Srednebotuobinskoye field, Phase 2) Location Krasnoyarsk Territory The Sakha Yakutia Republic 3Р PRMS reserves1 456 mmtoe / 3,251 mmboe 281 mmtoe / 2,053 mmboe Commissioning year Q4 2018 Q4 2018 Production in 2018 / 9M 2019 1.3 / 1.0 mmt
Slide 20: Progress on a Key Project: Rospan
Progress on a Key Project: Rospan MAJOR DRIVER OF THE COMPANY NEAR-TERM PRODUCTION GROWTH Indicator Value 891 bcm of gas, 207 mmt of gas condensate, 3Р reserves (PRMS) LPG and oil 4.9 bcm of gas 9M 2019 production 1.02 mmt of liquids Potential: > 21 bcm of gas Annual production > 5 mmt of liquids up
Slide 21: Gas Greenfield Development: Kharampur
Gas Greenfield Development: Kharampur THE MOST SIGNIFICANT (AFTER ROSPAN) PROJECT IN TERMS OF GAS PRODUCTION GROWTH1 Indicator Value 3Р reserves (PRMS), gas 650 bcm2 Gas production plateau: c. 11 bcmpa3 Phase 1 (Senomanian) Commissioning year 2020 Current status and Q3 2019 results: Gas collection
Slide 22: Calculation of Adjusted OCF
Calculation of Adjusted OCF Profit and Loss Statement Cash Flow Statement 9M 2019, 9M 2019, № Indicator Indicator № $ bn $ bn 9.6 Net income 1 № Indicator 100.6 Adjustments to reconcile net income to 8.5 2 cash flow from operations, incl. 1 Revenue, incl. 7.3 Reimbursement of prepayments (5.4) recei
Slide 23: Finance Expenses, Rub bn
Finance Expenses, Rub bn Indicator Q3 19 Q2 19 % 9M 19 9M 18 % 1. Interest accrued1 70 71 (1.4)% 215 208 3.4% 2. Interest paid2 70 68 2.9% 211 202 4.5% 3. Change in interest payable (1-2) – 3 (100.0)% 4 6 (33.3)% 4. Interest capitalized3 39 41 (4.9)% 121 108 12.0% 5. Net loss from operations with fi
Slide 24: Sensitivity Analysis
Sensitivity Analysis 9M 2019 EBITDA and net income sensitivity to 9M 2019 EBITDA and net income sensitivity to +/- 10% change in Urals price +/- 10% change in Rub/$ exchange rate Rub bn Rub bn EBITDA EBITDA (239) 239 (288) 288 Net Income Net Income (191) 191 (230) 230 -10% 64.1 +10% -10% 65.1 +10% $
Slide 25: Openness and transparency in information disclosure – ESG ratings
Openness and transparency in information disclosure – ESG ratings increases in the nine months of 2019 rating + 4 rating + 8 A- A 59 63 B (77) (85) 55 (63) 2016 2017 2018 2016 2017 2018 rating + 12 57 48 45 2016 2017 2018 Ongoing engagement with 16 leading ESG agencies First ESG seminar with Nordic
Slide 26: Q&A
Q&A