Rosneft · RUS:ROSN

Rosneft — Rosneft Oil Company — Q1 2015 Earnings Presentation

30 slides from Rosneft's earnings presentation, Jun 26, 2015

  1. Slide 1: Rosneft Oil Company IFRS Results Q1 2015

    Rosneft Oil Company IFRS Results Q1 2015 26 June 2015

  2. 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

  3. Slide 3: Market Environment

    Market Environment: Commissioning of major projects as scheduled despite the change in oil price Oil prices and the exchange rate(1) $/bbl RUB/$ 160 80 Brent The most powerful Urals Verkhnechonsk Russian crude distillation Pobeda field exchange rate unit in Tuapse discovered 120 60 Vankor 80 40 40 2

  4. Slide 4: Macroeconomic Environment

    Macroeconomic Environment Rise in transportation tariff and new rates of industry-specific taxes Transportation costs RUB bln  Indexation of transportation tariffs: 16 11  Transneft tariffs for oil transportation by 6,5-7,5% and oil products by 10% 144 117  Russian Railways tariffs by 10% Q1 2014

  5. Slide 5: Production Performance in Q1 2015

    Production Performance in Q1 2015 : Increase of main indicators Indicator Q1 2015 Q1 2014 ∆ Comments increase in production at new fields, sustaining production Hydrocarbon production, 5,200 5,092 2.1% at brownfields due to kboepd implementation of key well works, gas production growth increase in u

  6. Slide 6: Financial Performance in Q1 2015

    Financial Performance in Q1 2015 Increase in net income and free cash flow while ramping up operations RUB bln Indicator Q1 2015 Q1 2014 ∆ Comments efficient distribution of commodity flows and utilization Revenue 1,288 1,375 (6.3)% of premium channels with the Urals price reduction by 52%. Revenue

  7. Slide 7: Financial Results

    Financial Results

  8. Slide 8: Revenues Structure and Dynamics

    Revenues Structure and Dynamics Increased oil and products export volumes, increased gas sales efficiency Change in revenues RUB bln External factors: RUB -154 bln; -11% Company controlled factors: RUB +67 bln; +5% 502 (625) 23 (21) (33) 4(1) 61 2 1,375 1,288 1Q'14 Exchange rate Urals price decline

  9. Slide 9: EBITDA

    EBITDA: Stable indicator of operating profit with more than x2 oil price reduction RUB bln External factors: RUB -6 bln; -2% Company controlled factors: RUB +3 bln; +1% (159) 235 (22) (20) 4 (11) (33) (8)(2) 4 7 289 286(1) Q1 2014 FX difference in Reduction in Duty lag Change in rates Change in exci

  10. Slide 10: Maintaining OPEX at Record Low Levels

    Maintaining OPEX at Record Low Levels Lifting costs Lifting costs: benchmarking(1) $/boe $/boe (2) 20 Peers Rosneft 15 10 4.1 4.1 3.7 3.4 2.5 5 4.3 3.9 2.9 2.5 0 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 2012 2013 2014 Q1 15  In Q1 2015 lifting costs amounted to 2.5 $/boe, reduction by more than 26% by Q4 2014

  11. Slide 11: Investment Program Flexibility

    Investment Program Flexibility CAPEX and production Upstream CAPEX: benchmarking(1) Production 50 $/boe (2) Peers Rosneft RUB bln mmboe growth 2% 200 500 40 163 400 150 133 30 133 128 300 104 100 20 200 10.6 50 10 6.8 100 5.3 3.5 0 0 0 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 2012 2013 2014 Q1 15 Other Downstr

  12. Slide 12: Operations Efficiency

    Operations Efficiency: Operations generate a sustainable cash flow Operating cash flow(1) and Capex RUB bln Capex OCF OCF/Capex 0 3 2.2 2.3 2.2 0 2.0 2 1.8 0 1.6 2 1.2 1.3 0 1 0 1 0 304 355 0 0 214 231 225 245 258 0 188 0 - 153 130 104 133 133 163 128 0 182 - 0 - 0 - Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3

  13. Slide 13: On Top of Cash Flow Generation

    On Top of Cash Flow Generation Operating cash flow(1) Free cash flow(1,2) RUB bln +38% RUB bln x2.2 604 1,186 1,161 1,043 843 274 249 141 Russian VIOC Rosneft Russian VIOC Rosneft Russian VIOC Rosneft Russian VIOC Rosneft 1Q’14 (LTM) 1Q’15 (LTM) 1Q’14 (LTM) 1Q’15 (LTM)  LTM free cash flow more than

  14. Slide 14: Free Cash Flow

    Free Cash Flow: Positive dynamics due to management efficiency Stably high indicators of the free cash flow(1,2)  RUB 130 bln – free cash flow in Q1 2015; 40 $/boe $/bbl 120 keeping positive dynamics during the year, primarily due to effective working capital 30 90 management 20 60 7.7 7.0 9.7 8.6

  15. Slide 15: Financial Stability

    Financial Stability: Efficient debt portfolio management Net debt dynamics Repayment schedule(3) 60 $ bln(1) $ bln 50 40 30 57.4 20 43.8 43.3 (2) 10 19.8 15.5 18.1 13.3 10.7 0 5.6 2012 2013 2014 Q1 2015 Q2-Q4 2016 2017 2018 2019 2015 & beyond  As of the end of Q1 2015, net debt decreased by $ 0.5 

  16. Slide 16: Operational Results

    Operational Results

  17. Slide 17: Stable Hydrocarbon Production Dynamics

    Stable Hydrocarbon Production Dynamics Key achievements in Q1 2015 Hydrocarbon production  Increase in liquids daily production in Samaraneftegaz (+ kboepd 5,200 5,092 2.9%), VCNG (+ 9.7%) and RN-Uvatneftegaz (+ 6.8%) vs. Q1 2014 as a result of EOR methods application and reduced well construction

  18. Slide 18: Planned Increase of Drilling Volume

    Planned Increase of Drilling Volume Key achievements in Q1 2015 Development drilling footage  Growth of production drilling footage by 36% due to th. m increasing capacities of the in-house services  Reducing the time of horizontal wells drilling by 30% at Prirazlomnoye field in KhMAO due to optim

  19. Slide 19: Advanced oil field services

    Advanced oil field services Leading positions in production drilling in-house services Penetration rate, th. m/rig per month Cost of meter drilled, th. rub/m 8.0 11.7 6.5 6.4 5.8 3.7 6.2 6.6 6.6 6.8 6.8 3.1 Внутренний 3Сторонний Internal rd party 3Сторонний rd party 3Сторонний rd party Сторонний 3rd

  20. Slide 20: Gas Business

    Gas Business: Effective production buildup Key achievements in Q1 2015 Gas production bcm  APG utilization rate rose to 87% (81% in 2014), mainly 15.80 as a result of increasing gas supplies from Vankor field to Gazprom network 13.20 +20%  Contracts for gas sales up to 0.4 bcm per year from North

  21. Slide 21: Improved Refining Efficiency

    Improved Refining Efficiency  1Q’14 operating highlights  Light product yield  Refining throughput in Russia flat at 21.7 mmt (+0.4% compared to 1Q’14) 65% 55% – light product yield in 2014  Optimization of product slate provided light product yield increase to 55.9%  Crude oil conversion rate

  22. Slide 22: Crude and Product Sales

    Crude and Product Sales Oil monetization channels in Q1 2015 Sales of crude oil 47% 54% Netback, $/t $225 $226 $219 43% 3% 54% Percentage in sales, % 1Q1 кв.2014 2014 1Q1 кв. 2015 2015 Высокомаржинальные High-margin channels каналы Переработка Refining нефти на НПЗ Внутренний Domestic рынок market Э

  23. Slide 23: Appendix

    Appendix

  24. Slide 24: Production Performance in Q1 2015 and Q4 2014

    Production Performance in Q1 2015 and Q4 2014: Stable performance despite the volatility of external environment Indicator Q1 2015 Q4 2014 ∆ Comments Hydrocarbon production, 5,200 5,200 - Sustain production level kboepd refining margin deterioration due to Oil refining in Russia introduced "tax mane

  25. Slide 25: Financial Performance in Q1 2015 and Q4 2014

    Financial Performance in Q1 2015 and Q4 2014 RUB bln Q1 Q4 Indicator ∆ Comments 2015 2014 drop in the world prices was in part offset by the ruble exchange rate reduction and increase in the Revenue 1,288 1,311 (1.8)% volume of sale via the higher margin export channel. Revenue in dollar terms amoun

  26. Slide 26: Structure and Dynamics of Revenues in Q1 2015 and Q4 2014

    Structure and Dynamics of Revenues in Q1 2015 and Q4 2014 Change in revenues RUB bln External factors: RUB -110 bln; -9% Company controlled factors: RUB +87 bln; +7% 288 (340) 52 (53) 24 (21) (27) (33) 15 73 (1) 1,311 1,288 4Q'14 Exchange rate Urals price Duty lag Domestic Tax rates Prepayments Numb

  27. Slide 27: Q1 2015 and Q4 2014 EBITDA

    Q1 2015 and Q4 2014 EBITDA External factors: RUB +51bln; +27% Company controlled factors: RUB +47 bln; +25% (53) 118 (20) (73) (11) 4 28 127 (33) (4) 15 286(1) 188 Q4 2014 Exchange rate Urals price drop Lag in export duty Drop in domestic Change in the rates Change in Exchange risk Number of days in

  28. Slide 28: Net Debt

    Net Debt Generation of high operating cash flow reduces net debt $ bln 0.2 (0,3)(2) 0.4 0.9 (3,8) 2.7 43,8(1) 43.3 (0,6) 31.12.2014 Оperating Revenues from CAPEX, Liabilities under financial Acquisition of participation Loans from acquired Тranslation reserve 31.03.2015 cash asst sale license and in

  29. Slide 29: EBITDA and Net Income Sensitivity

    EBITDA and Net Income Sensitivity Change in the Urals price Change in the exchange rate bln RUB -10 USD/bbl +10 USD/bbl bln RUB -5 RUB/USD +5 RUB/USD EBITDA EBITDA -160 160 -131 131 Чистая прибыль Net income Чистая прибыль Net income -128 128 -105 105  With the Urals price increase by USD 10 in 2Q-

  30. Slide 30: Questions and Answers

    Questions and Answers

Rosneft Oil Company — Q1 2015 Earnings Presentation on 6ix