Rosneft · RUS:ROSN
Rosneft — Rosneft Oil Company — Q2 2019 Earnings Presentation
25 slides from Rosneft's earnings presentation, Aug 21, 2019
Slide 1: Rosneft Oil Company IFRS Results Q2 2019
Rosneft Oil Company IFRS Results Q2 2019 August 21, 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» Strategy: enter the The Energy Saving Innovative «Rosneft-2022» The social sphere UN Global Compact first quartile of Program in force Development Strategy: investments Participant international oil and since 2009 Program, 2018 incremen
Slide 5: Navigating OPEC+ Environment
Navigating OPEC+ Environment Crude oil and condensate production in Russia Brent price 5.0 90 6 total Russia (RHS) mmbpd 11.6 $/bbl ‘000 Rub/bbl Rub Rosneft (LHS) $ entry level for the production cut production losses (constraints on supplies) 4.8 production level after the OPEC+ restrictions 11.2 7
Slide 6: Production Dynamics
Production Dynamics Hydrocarbon production H1 2019 vs H1 2018 kboed 49 (37) 41 Robust development of major greenfields 47 (Kondinskoe, Srednebotuobinskoe, Yurubcheno-Tokhomskoe) Production ramp up at other brownfields (Samara, Nyagan, Varyoganneftegas) Rapid development of the Zohr gas field +
Slide 7: Refining
Refining Refining margins Refining economics in Q2 2019 Russia¹ Europe $/bbl Minor increase of margins in Russia due to dampfer growth QoQ 7.5 7.6 7.8 Declining margins in Germany in H1 2019 following low gasoline crack spreads in the 5.6 5.3 5.4 5.1 region and turnaround at PCK Schwedt in April
Slide 8: Focus on Distribution Channels Development
Focus on Distribution Channels Development Netbacks for the main crude oil marketing channels Crude oil marketing breakdown Export, Asia mmt 430 Export, Europe and other Refining in Russia Domestic market 56.8 60.0 61.7 390 Export, West 25% 24% 27% $/т 350 310 270 Export, Asia 24% Q1 18 Q2 18 Q3 18
Slide 9: Efficient Control over the Costs
Efficient Control over the Costs Lifting costs Refining costs in Russia Rub/boe Quarter LTM average % YoY Rub/bbl Quarter LTM average % YoY 199 198 215 213 205 203 192 195 180 183 193 172 23.8% 12.0% 8.9% 5.4% 5.7% 3.8% 2.1% 3.0% 0.0% -4.4% Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19
Slide 10: Earnings Growth
Earnings Growth EBITDA Q2 vs Q1 2019 Rub bn 2 30 (40) 27 (31) (18) 4 4 (7) (2) (2) 548 515 External factors: Internal and seasonal factors: Rub +9 bn; +1.6% Rub -42 bn; -7.7% Q1 2019 Exchange rate Excess profit tax Crude oil price Share in profits of Export duty Number of days in Excise tax rate; Pr
Slide 11: Focused on Value and Growth CAPEX
Focused on Value and Growth CAPEX CAPEX Rub bn H1 2019 CAPEX was Rub 436 bn down 3.5% YoY following drilling program optimization aimed at horizontal wells share increase to improve brownfields efficiency 922 936 CAPEX program priorities: maintaining stable production at brownfields through succ
Slide 12: Sustainable Free Cash Flow Generation
Sustainable Free Cash Flow Generation Free cash flow (LTM) Rub bn 1,133 1,188 1,102 916 422 286 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Free cash flow calculation (H1 2019) Rub bn 44 (87) 40 63 66 180 (436) 768 Reimbursement of prepayments under 462 LT crude oil supply contracts 332 (at an average FX ra
Slide 13: Financial Stability
Financial Stability Debt evolution Reimbursement of prepayments received $ bn Cash, cash equivalents and liquid financial assets $ bn Reclassification Net debt IFRS 16 effect Principal amount Net debt/EBITDA 2.1 1.7 1.5 +2.0 1.4 1.2 1.4 1.1 71.9 69.7 63.2 59.8 15.5 59.7 57.6 19.6 16.7 44.8 22.1 14.1
Slide 14: Appendix
Appendix
Slide 15: Key Operational Highlights
Key Operational Highlights Indicator Q2 19 Q1 19 % H1 19 H1 18 % Hydrocarbon production, incl. 5,710 5,902 (3.3)% 5,806 5,706 1.8% kboed Liquids 4,618 4,744 (2.7)% 4,681 4,585 2.1% kbpd Gas 1,092 1,158 1,125 1,121 (5.7)% 0.4% kboed Oil refining 24.96 26.87 (7.1)% 51.83 55.69 (6.9)% mmt Product outpu
Slide 16: Key Financial Highlights
Key Financial Highlights Indicator Q2 19 Q1 19 % H1 19 H1 18 % EBITDA, Rub bn 515 548 (6.0)% 1,063 950 11.9% Net Income, Rub bn 194 131 48.1% 325 298 9.1% attributable to Rosneft shareholders Adjusted net income1, Rub bn 230 242 (5.0)% 472 380 24.1% attributable to Rosneft shareholders Adjusted oper
Slide 17: 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 / H1 2019 4.1 / 1.2 mmt 4.5 / 2.5 mmt Oil production plateau4 c
Slide 18: 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 / H1 2019 1.3 / 0.6 mmt
Slide 19: New project launched in 2019: Zapadno-Erginskoye field
New project launched in 2019: Zapadno-Erginskoye field Indicator Value 3Р reserves (PRMS) 33 mmtoe / 242 mmboe Commissioning year Q2 2019 Production plateau c. 0.7 mmtpa (2022+) Tax breaks MET break (HTR) Second Erginsky cluster field was launched in June 2019 Preparation for the production init
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 3.3 bcm of gas H1 2019 production 0.7 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 Q2 2019 results: FEED is at the
Slide 22: Calculation of Adjusted OCF
Calculation of Adjusted OCF Profit and Loss Statement Cash Flow Statement H1 2019, H1 2019, № Indicator Indicator № $ bn $ bn 5.7 Net income 1 1 Revenue, incl. 65.5 Adjustments to reconcile net income to 6.1 2 Reimbursement of prepayments and cash flow from operations, incl. 4.7 other financial obli
Slide 23: Finance Expenses, Rub bn
Finance Expenses, Rub bn Indicator Q2 19 Q1 19 % H1 19 H1 18 % 1. Interest accrued1 71 74 (4.1)% 145 135 7.4% 2. Interest paid2 68 73 (6.8)% 141 124 13.7% 3. Change in interest payable (1-2) 3 1 >100% 4 11 (63.6)% 4. Interest capitalized3 41 41 – 82 70 17.1% Net loss from operations with financial 5
Slide 24: Sensitivity Analysis
Sensitivity Analysis H1 2019 EBITDA and net income sensitivity to H1 2019 EBITDA and net income sensitivity to +/- 10% change in Urals price +/- 10% change in Rub/$ exchange rate Rub bn Rub bn EBITDA EBITDA (158) 158 (183) 183 Net Income Net Income (126) 126 (147) 147 -10% 65.53 +10% -10% 65.34 +10%
Slide 25: Q&A
Q&A