Gazprom Neft · RUS:SIBN

Gazprom Neft — Q3 2010 Earnings Presentation

31 slides from Gazprom Neft's earnings presentation, Nov 3, 2010

  1. Slide 1: US GAAP Financial and Operating Results for the Third Quarter and Nine Months 2010

    US GAAP Financial and Operating Results for the Third Quarter and Nine Months 2010 November 03, 2010

  2. Slide 2: Disclaimer

    Disclaimer This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Gazprom Neft and its consolidated subsidiaries. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements

  3. Slide 3: Management team participating on this call

    Management team participating on this call Vadim Yakovlev Deputy Chairman of the Management Board and CFO Boris Zilbermints Deputy Chairman of the Management Board, Deputy CEO for Exploration and Production Anatoly Cherner Deputy Chairman of the Management Board, Deputy CEO for Logistics, Processing

  4. Slide 4: Agenda

    Agenda  Highlights  Macro Environment  Upstream  Downstream  Financials  Q&A  Appendix 44

  5. Slide 5: Q3'10 and 9M10 highlights

    Q310 and 9M10 highlights  9M10 production up 6% Y-o-Y  9M10 refining throughput up 13.2% Y-o-Y*  Assumed operatorship of East Orenburg field  Sanctioned associated gas utilization project at South Priobskoye field  Declared project leader for field development at Junin-6 (Venezuela  Penetrated

  6. Slide 6: Macro Environment

    Macro Environment Crude prices steady as ruble weakens slightly Q-o-Q Stable oil products prices 66

  7. Slide 7: Refining netbacks up Q-o-Q amid relative crude and ruble stability

    Refining netbacks up Q-o-Q amid relative crude and ruble stability Urals price Vs. FX Domestic product prices $US/tonne 3Q09 4Q09 1Q10 2Q10 3Q10 3Q09 4Q09 1Q10 2Q10 3Q10 3Q10 2Q10 3Q09 Q-o-Q Y-o-Y 9M10 9M09 Y-o-Y Average Urals price, $US/bbl 75.57 76.89 67.82 -1.7% +11.4% 75.92 56.76 +33.8% Crude ex

  8. Slide 8: Upstream

    Upstream Unlocking potential of existing portfolio and capturing new opportunities 88

  9. Slide 9: Acquisitions and renewed organic growth driving production increases

    Acquisitions and renewed organic growth driving production increases Group hydrocarbon production MMtoe  Record daily production of  Q310 vs. Q309 Production growth 13.3 MMtoe in 3Q10  Zapadno-Salymskoye (+12%),  Priobskoye (+8%),  Organic growth Q-o-Q & Y-o-Y at  Vyngapurovskoye (+5%), own fi

  10. Slide 10: Intensified drilling at 100% owned fields

    Intensified drilling at 100% owned fields New wells Other E&P activity  Strong activity at 100% owned fields:  Solid performance in 3Q10 due to  212 new wells drilled increased workovers:  Overcame low-base effect from 1Q10  72 hydrofracs with solid performance in 3Q10  12 deepenings  27 reco

  11. Slide 11: Downstream

    Downstream Managing structural advantages for optimal returns 11 11

  12. Slide 12: One of the highest refining cover in the industry

    One of the highest refining cover in the industry Gazprom Neft refining cover Gazprom Neft refining throughput 10.21 9.31 8.86 8.97 8.68 7.90  Systematically increased refining capacity to take advantage of the Russian export tax  Q-o-Q increase in refining volumes mainly differential due to compl

  13. Slide 13: Product sales up on strong netbacks

    Product sales up on strong netbacks (US$/bbl) 42.3 42.3 40.5 42.2 42.2 41.2 40.1 40.1 Omsk OmskRefinery Refinery 40.1 38.3 38.3 38.5 33.6 32.4 31.8 31.3 32.8 32.8 Yaroslavl Refinery Yaroslavl Refinery 32.0 30.2 31.731.7 31.431.4 Moscow Refinery Moscow Refinery Crude oil sales in 41.1% 15.6% 7.7% 5.9

  14. Slide 14: Robust premium channel sales capture additional value

    Robust premium channel sales capture additional value 14% 18% 1,000 tons 3,036 2 ,674 2,583 2 ,296 2,325 2,175 Aviation Lubricants Bunker  #1 retail supplier of aviation fuel in Russia  +23% sales growth vs. 3Q09  Russia’s leading bunker fuel  Growing sales volumes:  Launch of G-Family Lubrican

  15. Slide 15: Financials

    Financials Integrated business model and superior execution generate strong results 15

  16. Slide 16: Superior returns driven by strong prices and sales

    Superior returns driven by strong prices and sales 18% 43% 5% 23,709  Higher oil prices, oil production and refinery throughput drove Revenues, 16,598 revenues up 43% Y-o-Y US$ bln  Changes to the sales mix influenced the increase of quarterly revenues 11% 21% 30%  Y-o-Y and Q-o-Q EBITDA 4,269 5

  17. Slide 17: EBITDA reconciliation (3Q10 vs. 2Q10)

    EBITDA reconciliation (3Q10 vs. 2Q10) 69 2 011 103 29 40 275 153 79 12 1 550 206 Decrease in costs: +27 mln. $ Fx in costs: +2 mln. $ Upstream: +70 mln. $ 1 736 Price: -21 mln. $ Downstream: +83 mln. $ 1 344 Export duty: +142 mln. $ Other: -1 mln. $ Fx in revenues: -36 mln. $ Transport: -5 mln. $ 2Q

  18. Slide 18: Upstream development drives capex growth in 3Q10

    Upstream development drives capex growth in 3Q10 +32% $2 361 Capex Dynamics (US$ mln) $1 783 $ 1018 +39% $735 9M2009 9M2010  9M capex +32% Y-o-Y  3Q10 capex +39% Q-o-Q 18

  19. Slide 19: Strong cash flow to fund capex, debt repayments and dividends

    Strong cash flow to fund capex, debt repayments and dividends US$ mln Cash reconciliation: 3Q10 vs. 2Q10 Free cash flow Undrawn Pxf credit facility 19 19

  20. Slide 20: Continuing commitment to capital discipline

    Continuing commitment to capital discipline Debt breakdown Gearing and maturity mix 6,620 net debt/ ST/LT 5,791 capital debt 30% 80% 15% Short term 3,651 25% 60% 3,651 Short term Short term 4,212 20% Long term Long Term Debt 15% 40% 4,212 Long Term Debt 10% 20% 2,969 5% 2,969 (47)% 1,579 0% 0% 1,579

  21. Slide 21: Acquisition of Sever Energia – expansion into North YANAO region

    Acquisition of Sever Energia – expansion into North YANAO region Agreed Sever Energia Ownership: Samburgsky license area 51% - Yamal Razvitie (50/50 Gazprom Neft and Novatek JV) 49% : Eni + Enel Messoyakha Yaro-Yahinsky license area North-Chaselsky Novoportovskoye Evo-Yahinsky 9% Novatek fields 8% N

  22. Slide 22: Modernization of Omsk Refinery continues with launch of Izomalk-2

    Modernization of Omsk Refinery continues with the launch of Izomalk-2 isomerization unit  First step in the implementation of medium-term investment program to modernize refining facilities and produce more environmentally friendly fuels  Launch in October 2010  Largest capacity isomerization uni

  23. Slide 23: 40 new high margin G-Family products to be launched by 2011

    40 new high margin G-Family products to be launched in Russian market by 2011 G-Family sales in 2010(e) # of new product titles # of new product commodity items Cumulated sales, tonnes 1 435 1 125 83 823 79 75 606 71 377 63 155 52 39 40 33 36 31 32 28 24 18 14 9 10 April Апрель Май May Июнь June Jul

  24. Slide 24: Appendix

    0 cazpnom NE F T Appendix

  25. Slide 25: EBITDA reconciliation (9M10 vs. 9M09)

    EBITDA reconciliation (9M10 vs. 9M09) 918 583 50 211 5 147 184 329 198 229 711 4 269 661 Upstream: +5mln. $ Downstream: +176 mln. $ Price: +2653 mln. $ Other: +3 mln. $ 4 436 3 608 Export duty: -1904 mln. $ Fx in revenues: +471 mln. $ Increase in costs: -295 mln. $, including Transport: -302 mln. $

  26. Slide 26: Accounting reclassifications 2010 - 2009

    Accounting reclassifications 2010 - 2009 Reclass of transportation to refineries and other accounting reclassifications 2Q2010 1Q2010 9M2009 Transportation Cost of purchased oil, gas, petroleum products 1,788 (-71) 1,538 (-86) 3,609 (-184) Operating expenses 517 (-27) 455 (-5) Exploration costs Tran

  27. Slide 27: Units

    Units bbl barrel boe barrel of oil equivalent tonne metric ton toe tonnes of oil equivalent MMbbl million barrels MMboe million barrels of oil equivalent MMTonnes million tonnes MMtoe million tonnes of oil equivalent kbpd thousand barrels per day kboepd thousand barrels of oil equivalent per day ktp

  28. Slide 28: Production

    Production Crude Oil 3Q09 4Q09 1Q10 2Q10 3Q10 3Q09 4Q09 1Q10 2Q10 3Q10 Gazprom Neft (own) 7.648 7.581 7.292 7.452 7.619 56 55 54 55 56 Magma 0.076 0.071 0.065 0.068 0.096 0 1 0 0 0 MMTonnes MMbbl NIS 0.198 0.207 0.217 0.231 0.251 1 2 2 2 2 Share in Slavneft 2.393 2.366 2.277 2.298 2.305 18 17 17 17

  29. Slide 29: Refining

    Refining Refining: quarterly data Refining throughput 3Q09 4Q09 1Q10 2Q10 3Q10 3Q09 4Q09 1Q10 2Q10 3Q10 Omsk MMToe 4.74 4.42 4.50 4.67 5.07 34.7 32.4 33.0 34.2 37.2 MMboe Moscow 2.05 2.03 2.13 1.65 2.39 15.0 14.9 15.6 12.1 17.5 NIS 0.66 0.65 0.66 0.71 0.83 4.8 4.8 4.9 5.2 6.1 Share in Yaroslavl 1.86

  30. Slide 30: Sales volumes

    Sales volumes Sales Volumes 3Q09 4Q09 1Q10 2Q10 3Q10 Oil Export (excl. CIS) MMbbl 27.9 30.8 28.6 31.5 28.3 CIS MMbbl 7.3 5.1 5.2 6.4 5.3 Domestic MMbbl 0.7 0.4 - - - Total MMbbl 35.9 36.3 33.8 37,9 33.6 Export (excl. CIS) MMTonnes 3.8 4.2 3.9 4.3 3.9 CIS MMTonnes 1.0 0.7 0.7 0.9 0.7 Domestic MMTonne

  31. Slide 31: Retail

    Retail Retail network (aver.) 3Q09 4Q09 1Q10 2Q10 3Q10 Gazprom Neft units 1 647 1 696 1 706 1 731 1 720 Active units 1 483 1 555 1 567 1 575 1 579 Russia units 893.0 924.0 935.0 927.0 932.0 CIS (excl. Russia) units 117.0 158.0 160.0 176.0 175.0 Europe units 473 473 472 472 472 Non-operating units 16

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