Gazprom Neft · RUS:SIBN

Gazprom Neft — Q3 2013 Earnings Presentation

29 slides from Gazprom Neft's earnings presentation, Nov 12, 2013

  1. Slide 1: IFRS Financial and Operating Results for Third Quarter 2013

    IFRS FINANCIAL AND OPERATING RESULTS FOR THIRD QUARTER 2013 12 November 2013, St. Petersburg

  2. Slide 2: Agenda

    AGENDA  Highlights, Alexey Yankevich Financials Member of the Management Board, CFO  Upstream Mihail Zhechkov Head of Economics and Investment Department, Exploration and Production Division  Downstream Vladimir Konstantinov Head of Economics and Investment Department, Refining and Marketing Divi

  3. Slide 3: 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

  4. Slide 4: Highlights

    HIGHLIGHTS 9M 2013 Financial Performance:  Revenue: RUB 938 bln (+2.6% Y-o-Y)  EBITDA*: RUB 252 bln (+2.9% Y-o-Y)  Net Income: RUB 135 bln (+0.4% Y-o-Y) Operational Progress in 9M 2013:  Hydrocarbon production up 4% Y-o-Y  Refining volumes down 1.8% Y-o-Y due to planned refinery turnaround  Pr

  5. Slide 5: Upstream

    Upstream Major projects and new technologies deliver production growth IFRS FINANCIAL AND OPERATING RESULTS FOR THIRD QUARTER 2013 5

  6. Slide 6: Continued new opportunities in legacy fields

    CONTINUED NEW OPPORTUNITIES IN LEGACY FIELDS 9M 2013 Key Events: Exploration: Tight Oil  Testing continues on Bazhenov formation at Palyanovskaya acreage of Krasnoleninskoye field  Exploratory drilling identified Jurassic layer crude deposit in eastern section of Western Luginetsky license block.

  7. Slide 7: Broad-based production growth drives industry leadership in 9M2013

    BROAD-BASED PRODUCTION GROWTH DRIVES INDUSTRY LEADERSHIP IN 9M2013 Peer Comparison: Hydrocarbon Production 3Q 2013 vs 3Q 2012 Reconciliation Increase in Russia*, 9M 2013 vs 9M 2012, % Gazprom Neft Bashneft Lukoil Rosneft Surgutneftegaz * Source: Central Control Administration of the Fuel and Energy

  8. Slide 8: New technologies deliver improved results

    NEW TECHNOLOGIES DELIVER IMPROVED RESULTS Multi-Stage Hydrofracking Horizontal Wells Drilled, units 164  Commissioned horizontal well at Vyngapurovskoye +228% field (first Group 10-stage hydrofrac)  Well depth 4,500m; horizontal section 1,000m 50  Flow rate 135 tons/day, higher rate than horizont

  9. Slide 9: New upstream projects developments update

    NEW UPSTREAM PROJECTS DEVELOPMENTS UPDATE Partnership with Shell Chonskiy Si (KMPA) Kuyumba Dolginskoye Iraq (Kurdistan) Completed 3D seismic Signed partnership agreement Conducted seismic Approved oil spill A new world 3D field work using UniQ with Shell (resource potential program for 2012- respon

  10. Slide 10: New upstream projects developments update

    NEW UPSTREAM PROJECTS DEVELOPMENTS UPDATE Iraq Iraq (Badra) (Badra)  Completed testing of well Bd-4  Completed oil export pipeline linear section construction Messoyakha  ZPEC chosen as contractor to drill  Finalized the concept for 6 development wells Orenburg phase 1 infrastructure Iraq (Badra

  11. Slide 11: Novoport: transportation plan approved

    NOVOPORT: TRANSPORTATION PLAN APPROVED  Transportation: pipeline marine terminal near Cape Kamenny Standard tankers Murmansk seaport (using purpose-built tankers) customs control & Purpose-built shuttle tankers, Arc6 ice class Transport leg 2 reloading to the conventional tankers export Murmansk -

  12. Slide 12: Drilling the first well at Arctic offshore

    DRILLING THE FIRST WELL AT ARCTIC OFFSHORE  Located on the Pechora Sea shelf 60 km offshore (village of Varandey, Nenets Autonomous Area)  Sea depth in the field location: 19-20 m  Development time frame: 25 years  Well stock: 36 wells (estimated)  Oil spill prevention and response plan approve

  13. Slide 13: Downstream

    Downstream Rising product quality, growth in premium channels IFRS FINANCIAL AND OPERATING RESULTS FOR THIRD QUARTER 2013 13

  14. Slide 14: Prices of crude oil and petroleum products grow in third quarter

    PRICES OF CRUDE OIL AND PETROLEUM PRODUCTS GROW IN THIRD QUARTER $/bbl Crude oil prices $/bbl Gazprom Neft average netbacks Domestic product wholesale prices change Domestic product retail prices change +6% Regular Gasoline (92) +4% Diesel +7% Diesel +6% Premium Gasoline (95) +4% Regular Gasoline (9

  15. Slide 15: 85% of own crude is processed in high quality company refineries

    85% OF OWN CRUDE IS PROCESSED IN HIGH QUALITY COMPANY REFINERIES Crude distribution, Change 3Q 2013, Y-o-Y MMTonnes Y-o-Y 1.60 MMTonnes -50% Crude purchases 12.82 0% MMTonnes Omsk -11% Crude production Refinery 76% Refining/resource Crude resource Moscow +10% 14.3 MMTonnes 85% Refinery of own crude

  16. Slide 16: Converting group refineries to advanced oil processing centers

    CONVERTING GROUP REFINERIES TO ADVANCED OIL PROCESSING CENTERS Licensor FEED Operational Equipment Construction Base Project choice development documentation delivery &installation Deep processing unit* Omsk CDU/VDU unit Delayed coker unit Moscow Complex processing unit** Deep processing unit*** Yar

  17. Slide 17: Expanding retail sales in third quarter

    EXPANDING RETAIL SALES IN THIRD QUARTER  Retail sales in 3Q 2013: • Russia and CIS 2.2 MMTonnes +13% Y-o-Y • Balkans 0.2 MMTonnes +24% Y-o-Y  Throughput per station in Russia reached 19.7 tpd in 3Q 2013, 6.6% growth Y-o-Y  Non-oil sales (RF) reached RUB 3bln in 3Q 2013, 49% growth Y-o-Y  Acquire

  18. Slide 18: Retail gasoline and diesel sales growth outperforms Russian average

    RETAIL GASOLINE AND DIESEL SALES GROWTH OUTPERFORMS RUSSIAN AVERAGE Russia +4.0% +3.3% +9.7% + 13.3% Gazprom Neft Gasoline sales growth drivers: Diesel sales growth drivers:  Retail chain rebranding  Retail chain rebranding  G-Drive fuel sales growth  Non-cash payment system  Loyalty program an

  19. Slide 19: Substantial international expansion in premium channels

    SUBSTANTIAL INTERNATIONAL EXPANSION IN PREMIUM CHANNELS Aviation Bunkering 9M 2013 Key events: 9M 2013 Key events:  Expanded global presence to 117 airports in 44 countries  Finalized acquisition of Estonian bunkering operator AS (+18 in 9M 2013) Baltic Marine Bunker and Romanian bunkering operato

  20. Slide 20: Expanding market share drives volume growth

    EXPANDING MARKET SHARE DRIVES VOLUME GROWTH Lubricants Bitumen 9M 2013 Key events: 9M 2013 Key events:  Sales of G-Family products grew by 32% Y-o-Y  Began production at bitumen plant in Kazakhstan  Began deliveries to Libya, Nigeria and Turkmenistan,  Created a JV with Total to produce polymer-

  21. Slide 21: Brand development drives customer loyalty and sales growth

    BRAND DEVELOPMENT DRIVES CUSTOMER LOYALTY AND SALES GROWTH Leading retail brand Premium fuel products portfolio  Leading positions in Russia:  G-Drive fuel sales • Brand awareness #2 (85%) outperformed business • Intention-to-use #1 (47%) plan by 100% 9M13 vs. • Brand satisfaction #1 (86%) 9M12 

  22. Slide 22: Financials

    Financials Substantial income growth Q-o-Q; modest improvement Y-o-Y IFRS FINANCIAL AND OPERATING RESULTS FOR THIRD QUARTER 2013 22

  23. Slide 23: Substantial income growth Q-o-Q; modest improvement Y-o-Y

    SUBSTANTIAL INCOME GROWTH Q-O-Q; MODEST IMPROVEMENT Y-O-Y  Revenue grew 2.6% Y-o-Y on higher +2.6% hydrocarbon production volumes and increased sales through premium Revenues channels, partially offset by lower RUB bln crude oil price  Higher prices and increased domestic sales volumes resulted in

  24. Slide 24: EBITDA reconciliation 9M 2013 vs. 9M 2012

    EBITDA RECONCILIATION 9M 2013 VS. 9M 2012 EBITDA 9M 2013 vs 9M 2012, RUB mln 251,919 244,894 IFRS FINANCIAL AND OPERATING RESULTS FOR THIRD QUARTER 2013 24

  25. Slide 25: EBITDA reconciliation 3Q 2013 vs. 2Q 2013

    EBITDA RECONCILIATION 3Q 2013 VS. 2Q 2013 EBITDA 3Q 2013 vs 2Q 2013, RUB mln 101,352 73,874 IFRS FINANCIAL AND OPERATING RESULTS FOR THIRD QUARTER 2013 25

  26. Slide 26: Strong free cash flow generation

    STRONG FREE CASH FLOW GENERATION RUB million Cash Flow Reconciliation 9M 2013 * Projects that are not consolidated under IFRS IFRS FINANCIAL AND OPERATING RESULTS FOR THIRD QUARTER 2013 26

  27. Slide 27: Investments support strategic goals and upstream production in mature fields

    INVESTMENTS SUPPORT STRATEGIC GOALS AND UPSTREAM PRODUCTION IN MATURE FIELDS Investments (RUB mln) 23% Y-o-Y growth in brownfield capex due +16% 143 403 to increase in use of new technologies in legacy fields 9 602 123 149 5 521 3 210 Active development of Orenburg cluster, 5 463 9 752 Novoport cons

  28. Slide 28: Continued improvements in balance sheet and debt portfolio

    CONTINUED IMPROVEMENTS IN BALANCE SHEET AND DEBT PORTFOLIO 0,3% 19,4% USD RUB 47,5% Euro Other 32,8%  Net debt/EBITDA 0.46x vs. target <1.5x  Reduced average interest rate from 3.48% in 4Q 2012 to 3.31% in 3Q 2013  Increased average debt maturity from 3.81 years in 4Q12 to 4.26 years in 3Q13  Di

  29. Slide 29: Questions & Answers

    Questions & Answers IFRS FINANCIAL AND OPERATING RESULTS FOR THIRD QUARTER 2013 29

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