Gazprom Neft · RUS:SIBN
Gazprom Neft — FY2011 Earnings Presentation
34 slides from Gazprom Neft's earnings presentation, Feb 28, 2012
Slide 1: Gazprom Neft 2011 Results
Gazprom Neft 2011 Results 28 February 2012
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
Slide 3: Agenda
Agenda Highlights, Macro Alexey Yankevich Environment, Acting CFO Financials Vadim Yakovlev Upstream Deputy Chairman of the Management Board, First Deputy CEO Downstream Vladimir Konstantinov Head of Economics and Investment Department Refining and Marketing Division Strategy Sergey Vakulenk
Slide 4: Strong financial performance while advancing on 2020 strategic goals
Strong financial performance while advancing on 2020 strategic goals Financial performance: • Revenue: US$ 44,172 mln (+34% Y-o-Y) • EBITDA* : US$ 10,158 mln (+40% Y-o-Y) • Net Income: US$ 5,352 mln (+70% Y-o-Y) Continued operational progress: • Production up 8% Y-o-Y • Refining volumes up 7 % Y
Slide 5: Macro Environment
Macro Environment Stronger prices, demand and ruble 55
Slide 6: Strong macro drivers Y-o-Y, introduction of 60-66 tax regime
Strong macro drivers Y-o-Y, introduction of «60-66» tax regime in 4Q 2011 Brent, $/bbl Average exchange rate 2011 vs 2010 40.0% -3.2% Stabilized global crude and product prices Intensified regulatory interest in refinery modernization and product quality Ruble appreciation against US$ Brent, $
Slide 7: Upstream
Upstream New projects on track, continuing resource base extension and efficient development of legacy fields 77
Slide 8: Reserves replacement rate surges on strength of organic growth and acquisitions
Reserves replacement rate surges on strength of organic growth and acquisitions Changes in PRMS (SPE) proved reserves (MMtoe) Revisions, MMToe 286% Reserves replacement ratio 214% Organic reserves replacement ratio YE 2010 Group Revisions Acquisitions* YE 2011 Legacy Natural Slav Tomsk SPD Sever Tot
Slide 9: Organic upstream activities and acquisitions drive 8% hydrocarbon production growth
Organic upstream activities and acquisitions drive 8% hydrocarbon production growth Y-o-Y Hydrocarbon production, MMtoe Peer comparison Hydrocarbon production increase 2011E vs 2010 Annual hydrocarbon production, MMtoe Gazprom Neft 57.3 Rosneft 52.8 Surgutneftegas TNK-BP Lukoil 99
Slide 10: Efficiency and optimization efforts deliver industry-leading cost control
Efficiency and optimization efforts deliver industry- leading cost control % change in opex/boe 2011 Y-o-Y % change in capex/boe 2011 Y-o-Y One-off 5,7 - New natural gas project launch Opex/boe: moderate growth Capex/boe: decreased Energy efficiency Reducing drilling time Installing energy eff
Slide 11: Solid pipeline of domestic upstream projects
Solid pipeline of domestic upstream projects Orenburg 2011 2011 production Created new production cluster in Novoport Reactivated & studied 4 wells cluster Orenburg based on eastern part of (100%) Began FEED for test production (100%) Orenburg oil field (transferred from Preparing for drilli
Slide 12: Continued progress across diverse international upstream project pipeline
Continued progress across diverse international upstream project pipeline Badra Junin 6 Exploration (30%) (8%) Completed de-mining Completed initial social Cuba(30%) – completed and ecological audit 2D seismic; identified Completed 3D seismic potential structures; and interpretation Coordi
Slide 13: Dynamic growth positions NIS as regional leader
Dynamic growth positions NIS as regional leader NIS hydrocarbon production Net income, US$mln (MMboe) Regional benchmarking Strong production, refining and sales 40% $/boe growth positions NIS as Balkan leader 18 and a growing part of the Gazprom 35% 16 Neft family 30% 14 Benchmarking against re
Slide 14: Successful sale of oilfield services business segment improves efficiency and focus
Successful sale of oilfield services business segment improves efficiency and focus Transaction rationale Key events Focus on production, GPN core business segment Re-allocate capital from oilfield services (OFS) assets to Type of exploration and production investment to achieve increased Date o
Slide 15: Downstream
Downstream Fuel quality upgrades and increases in premium sales add value to industry-leading portfolio 15 15
Slide 16: Refining throughputs and margins rise as product basket quality improves
Refining throughputs and margins rise as product basket quality improves Gazprom Neft refining throughput (MMTonnes) 7.4 7.2 10.8 8.9 Gazprom Neft gasoline and diesel yields 19.9 19.0 (MMTonnes) Gasoline Diesel 2.9 2.4 16 16
Slide 17: Focus on high margin retail sales and targeted network growth
4 Focus on high margin retail sales and targeted network growth Chelyabinsk network doubles Retail + small whole sales, in size MMTonnes Gazprom Neft retail metrics Continued focus on Moscow market 17 17
Slide 18: Continued development of other high margin sales channels
4 Continued domestic and international development of other high margin sales channels 2011 premium Market sales growth share Acquisition of Moscow lubricants plant 34% Retail Acquired 113, rebranded 290 51% Lubricants Significant increased the share of premium lubricants (G-family sales x2.5) 53% A
Slide 19: Maintenance at Omsk and Moscow refineries scheduled for low demand winter season
Maintenance at Omsk and Moscow refineries was scheduled for low demand winter season Refining throughput*, Motor fuel production*, Efficiency ratios*, % MMTonnes MMTonnes -14% Gasoline Light products yield -22% 10,5 2,2 1,7 3Q 2011 61,0 9,0 -3,1 p.p. 3Q 4Q 4Q 2011 57,9 2011 2011 Diesel Refining dept
Slide 20: Crude exports absorb seasonal/maintenance variations
4 Crude exports absorb seasonal/maintenance variations Gazprom Neft Crude mix Gazprom Neft average netbacks $/bbl (MMTonnes) 0.82 Crude to CIS 0.72 4.2% 0.75 -13.1% & Russia 2.65 Crude Export 3.89 -5.1% 3.69 39.2% 11.39 9.91 -0.1% 9.9 -8.5% Export/international crude volumes up 39.2% Refining Q-o-
Slide 21: Modernization program focused on increasing product quality
Modernization program focused on increasing product quality Omsk YANOS (100%) (50%) 2011 2011 ■ Completed first phase of FCC reconstruction ■ Commissioned isomerization unit ■ Completed reconstruction of diesel hydrotreater for ■ Completed FCC gasoline hydrotreater deparaffinization process ■ Instal
Slide 22: Further refinery investments planned for flexibility and growth
Further refinery investments planned for flexibility and growth Moscow NIS (77%) (56%) ■ Izomerization unit startup in 2013 ■ Completion of hydrocracking/hydrotreating facility ■ Reconstruction of diesel hydrotreater unit by end-2012 will deliver ■ FCC gasoline hydrotreater startup in 2013 Increas
Slide 23: Financials
Financials 70% Net Income Growth Y-o-Y 23 23
Slide 24: Volume growth and strong price environment drive positive financial trends
Volume growth and strong price environment drive positive financial trends Revenue decreased 4.0% Q-o-Q 22.5% -4.0% on lower sales volumes and 11,515 11,606 11,146 reduced crude and products Revenues 9,098 9,905 prices US$ mln Revenue grew 34.2% Y-o-Y on higher crude and products prices 4Q10 1Q1
Slide 25: EBITDA reconciliation 2011 vs. 2010
EBITDA reconciliation 2011vs.2010 10,158 7,271 Changes in Net Price = 2 255 Management effectiveness = 720 25 25
Slide 26: EBITDA reconciliation 4Q11 vs. 3Q11
EBITDA reconciliation 4Q11vs.3Q11 2,768 Effect 60/66/90 = +28,7 2,426 Export duty rate = -30,2 Changes in Net Price = 165 26 26
Slide 27: Record cash flow sufficient to cover increased capex and M&A
Record cash flow sufficient to cover increased capex and M&A Cash flow reconciliation US$ mln 27 27
Slide 28: Higher investment reflects greenfield developments, refinery upgrades and rebranding
Higher investment reflects greenfield project developments, refinery upgrades and rebranding Investments (US$ mln) M&A expenditure down 13% due to sale of oil field services assets in 2011 Higher NIS capex due to preparations to meet Euro 5 standards, increased hydrocarbon production and retail netw
Slide 29: Continued improvement in balance sheet and debt portfolio
Continued improvement in balance sheet and debt portfolio Debt ratios and maturity mix Debt by currency 0.6% 2.0 80% 1.7% 1.5 60% 1.0 40% USD RUB 62.8% 0.5 20% 34.9% EURO other 0.0 0% 2009 2010 2011 Net Debt/EBITDA Debt to EBITDA target Short term debt/total debt Net debt/EBITDA 0.6 vs. target < 1
Slide 30: Questions & Answers
0 cazpnom NE F T Questions & Answers
Slide 31: Appendix
0 cazpnom NE F T Appendix
Slide 32: Continued rise in global prices and domestic demand
Continued rise in global prices and domestic demand Brent, $/bbl Average Exchange Rate, rub/$ 40% 111.26 30.6 30.37 30.4 2011 30.2 79.5 30 -3.2% 29% 29.8 29.6 29.39 61.67 2010 29.4 2009 29.2 29 28.8 2010 2011 Global crude and product prices continue to climb PPI 18.00% 16.7% Ruble appreciation a
Slide 33: Midterm project pipeline will deliver over 20% of 2015 production
Midterm project pipeline will deliver over 20% of 2015 production +3.6 % CAGR 66.2 7 start-ups will add 13.9 MMtoe of 59.6 new production by 2015, delivering 57.3 52.8 13.9 21% of total forecasted production Significant contributions by 2015 from Orenburg, SeverEnergy, Novoport, Messoyakha, Badr
Slide 34: 2012 outlook: 4% upstream production increase from organic growth projects
2012 outlook: 4% upstream production increase from organic growth projects Investments(1), USD bln 2012F Highlights (1) Upstream brownfield Upstream greenfield (2) 2011E 2012F Refining Marketing & distribution NIS Other Hydrocarbon 57.3 mm toe 59.6 mm toe M&A production(2) 6 5.5 5.4 5,5 5,5 Refining