Bashneft Ank · RUS:BANE
Bashneft Ank — Bashneft — Russia: "The Inside Track" One-on-One Conference 2013
45 slides from Bashneft Ank's conference presentation, Sep 5, 2013
Slide 1: Bashneft Group Investor presentation
Bashneft Group Investor presentation Russia: “The Inside Track” One-on-One Conference Sberbank CIB 5-6 September 2013, London
Slide 2: Disclaimer
Disclaimer Certain statements in this presentation may contain assumptions or forecasts with respect to forthcoming events within Bashneft Group. The words “expect”, “estimate”, “intend”, “will”, “could”, negations thereof and similar expressions identify forward-looking statements. We wish to cauti
Slide 3: Table of Contents
Table of Contents Section Page 1. Business Overview and Key Achievements in 2Q2013 6 2. Start of Pilot production at R. Trebs and A. Titov fields 8 3. Bashneft petrochemical assets consolidation and divestment 18 4. Bashneft operational results 22 5. Bashneft financial results 29 Appendix: Group Str
Slide 4: Business Overview and Key Achievements in 2Q2013
1. Business Overview and Key Achievements in 2Q2013
Slide 5: Vertically-integrated Value Chain: from Oil Well to Petrol Tank
Vertically-integrated Value Chain: from Oil Well to Petrol Tank Exploration Production Refining Marketing: Wholesale & Retail Three interconnected Reserve life of 18 Petroleum products Intensively Sustainable refineries in close years and petrochemical developing retail production growth proximity t
Slide 6: Bashneft's key achievements in the second quarter of 2013
Bashneft’s key achievements in the second quarter of 2013 Operating results Average daily oil production increased by 1.0% to 314.8 thousand bbl/d; Average daily refining reached the level of 424.0 thousand bbl/d; Refining depth increased to 86.0%; The share of light products added 1.0 p.p. and reac
Slide 7: Start of pilot production at the R. Trebs and A. Titov fields
2. Start of pilot production at the R. Trebs and A. Titov fields
Slide 8: Pilot production at the R. Trebs and A. Titov fields is a new stage
Pilot production at the R. Trebs and A. Titov fields is a new stage in developing a large-scale project in the strategic region of exploration and production KEY FACTS C1+C2: 140.1 million tonnes RUSSIA The area including АВС1 reserves C3: 59.3 million tonnes the R.Trebs andA. Titov oilfields The Ya
Slide 9: Average daily oil output performance since the beginning of 2013
Average daily oil output performance since the beginning of 2013 46,9 mln. tonnes 46,4 45,9 Start of pilot production at the R. Trebs and A. Titov fields in the Nenets Autonomous District 45,4 44,9 44,4 43,9 43,4 42,9 42,4 41,9 41,4 January February March April May June July August 9
Slide 10: Key stages of the T&T project development
Key stages of the T&T project development April 2011 September 2011 February 2012 2011-2012 Bashneft and Lukoil signed an The Central Development Commission of the Federal Subsoil The first exploration well over 4.2 All projects underwent state expert agreement on cooperation in Resources Management
Slide 11: Start-up oil production facilities
Start-up oil production facilities: constructing facilities at exploration wells and connecting oil- gathering pipelines In 2011-2013, as part of preparing for pilot production at the R. Trebs and A. Titov fields, LLC Bashneft-Polyus, which operates the project, did the following: 12 exploration wel
Slide 12: Start-up crude oil distillation facilities: first stage of the CGS
Start-up crude oil distillation facilities: the first stage of the Central Gathering Station (CGS) at the R. Trebs field The project is aimed at gradual development of the CGS at the R. Trebs field, where all oil produced at the T&T fields will be distilled: The first stage with the capacity of up t
Slide 13: Start-up facilities at the R. Trebs field: metering station in Varandey
Start-up facilities at the R. Trebs field: the metering station in Varandey External transport and product loading facilities a high-pressure pipeline between the CGS at the R. Trebs oilfield and the metering station in Varandey with the total length exceeding 31 kilometres; a metering station; exte
Slide 14: Advanced technologies for geological exploration and development
Advanced technologies for geological exploration and development Field development involving maintaining reservoir energy by means of water-alternating-gas (WAG) injection; Optimization of field development resulting in a considerable increase in the recovery factor through miscible displacement com
Slide 15: Advanced technologies for drilling and well completion
Advanced technologies for drilling and well completion An operational drilling support centre (DSC) designed and built by Schlumberger; Enhancing the efficiency of well drilling by using rotary steerable systems; Horizontal well completion with ‘premium ports’: a system of inflow control devices ena
Slide 16: Technologies for designing and constructing the ground infrastructure
Technologies for designing and constructing the ground infrastructure Using 3D engineering for large on-site facilities; Using advanced solutions when constructing facilities in permafrost areas: 100% of reservoirs have ground thermal stabilization systems. The ‘as designed’ digital model An electro
Slide 17: Bashneft Group petrochemical assets consolidation and divestment
3. Bashneft Group petrochemical assets consolidation and divestment
Slide 18: Optimization of Group Structure
Optimization of Group Structure The historical complexity of the corporate structure had prevented the Group from fully achieving strategic goals; Transition to a single share As part of streamlining its corporate structure, in 2012 the Group completed reorganization in Downstream segment through co
Slide 19: Petrochemical assets consolidation timeline
Petrochemical assets consolidation timeline April 2012 January 2013 February 2013 July 2013 The Board of Directors of JSOC FAS granted JSOC Bashneft the OJSC UPC established LLC The Board of Directors of JSOC Bashneft approved the action plan for permission to buy out 25% + 1 share of Bisphenol, a w
Slide 20: Investments in petrochemical segment don't meet strategic goals of Bashneft
Investments in petrochemical segment don’t meet strategic goals of Bashneft The buyer and Обоснование сделки Rationale for the transaction the structure Possible structure of the UPC sale of a possible transaction Petrochemical business is a AFK Sistema (the controlling 6,2 bln. non-core business fo
Slide 21: Bashneft operational results
4. Bashneft operational results
Slide 22: Bashneft Group's key indicators for 2Q2013
Bashneft Group’s key indicators for 2Q2013 2Q2013 1Q2013 ∆, % Indicator 2Q2013 2Q2012 ∆, % Urals price, thousand roubles/barrel 3.24 3.38 -4.2% 3.24 3.31 -2.3% . Crude oil production, thousand tonnes 3,924 3,844 2.1% 3,924 3,811 3.0% Oil refining, thousand tonnes 5,285 5,216 1.3% 5,285 4,954 6.7% Pe
Slide 23: Strong Track-Record of Reserves Replacement
Strong Track-Record of Reserves Replacement RESERVES DYNAMICS*, mmbbl RESERVES REPLACEMENT, mmt 3 192 123% 2 987 164% 2 947 19,0 657 24,8 626 583 15,1 15,4 420 528 410 120 176 188 27 25 17 1 791 1 808 1 819 252 254 256 2010 2011 2012 2010 2011 2012 Proved developed Proved undeveloped Probable Possib
Slide 24: Production hits a new record high
Production hits a new record high Average daily oil production, thousand bbl/d +15.0% In the second quarter of 2013, the Group’s average daily 320 315 312 production reached 314.8 thousand bbl/d, hitting a 310 305 305 308 306 308 310 300 record high since 1996; 300 299 290 288 290 In the second quar
Slide 25: Refinery upgrade programme at the Ufa refineries
The refinery upgrade programme implemented at the Ufa refineries enables Bashneft to meet the requirements of the Technical Regulations for fuel quality in due time Oil refining In the first half of 2013 Bashneft’s refineries in Ufa processed 10,501 5,8 65% thousand tonnes of oil, which is 4.2% more
Slide 26: Marketing: efficiently developing own marketing channels
Marketing: efficiently developing own marketing channels Bashneft acquired a 100% stake in LLC Alternativa, which owns a network Exports of petroleum products and petrochemicals of 12 filling stations in the Orenburg Region and operates under the Q&R brand name; 2Q2013 1Q2013 Fuel oil VGO As of 30 J
Slide 27: Strategy
Strategy Expand upstream assets through organic growth and acquisitions Upstream Continue development of the Trebs and Titov fields and implement an extensive geological study in the Republic of Bashkortostan Upgrade refinery complex so that 100% of oil products are Euro 4 or Euro 5 compliant by 201
Slide 28: Bashneft financial results
5. Bashneft financial results
Slide 29: Macro indicators, 2Q2013
Macro indicators, 2Q2013* 2Q2013 1Q2013 ∆, % Indicator 2Q2013 2Q2012 ∆, % 31.6 30.4 3.9% Average RUB/USD exchange rate 31.6 31.0 1.9% 1.6% 1.9% -0.3 p.p. Inflation for the period, % 1.6% 1.7% -0.1 p.p. 24.2 24.0 1.0% Diesel fuel - summer (Russia), thousand roubles/tonne 24.2 22.4 8.0% 25.5 26.1 -2.4
Slide 30: Changes in revenue
Changes in revenue Revenue factor analysis, thousand tonnes, 2Q2013 vs. 1Q2013 In the second quarter of 2013, the revenue of Bashneft Group +10.7% 6 400 totalled 134,903 million roubles, which is 7.4% higher than in 40 6 200 the first quarter of 2013. The increase in revenue was caused 137 mainly by
Slide 31: Factor analysis of EBITDA and operating expenses
Factor analysis of EBITDA and operating expenses EBITDA factor analysis, million roubles, 2Q2013 vs. 1Q2013 32 500 +7,1% 30 000 (991) (1 981) 27 500 (309) (793) 9 323 25 000 (2 842) (460) (440) 22 500 20 000 17 500 15 000 12 500 21 223 22 730 10 000 7 500 5 000 2 500 0 1Q 2013 Revenue Cost of purcha
Slide 32: Changes in operating expenses
Changes in operating expenses 2Q2013 1Q2013 ∆, % Operating expenses, billion roubles 2Q2013 2Q2012 ∆, % 15.3 12.5 22.8% Production and operating expenses 15.3 13.8 10.6% 29.7 28.7 3.5% Cost of purchased crude oil, gas and petroleum products 29.7 26.6 11.8% 3.9 3.5 13.2% Selling, general and administ
Slide 33: Unit costs
Unit costs Unit production costs, roubles/bbl 250 202.3 205.0 246* In the second quarter of 2013, unit costs for production of crude oil roubles/bbl roubles/bbl 240 231* increased by 20.0% as compared to the first quarter of 2013 and totalled 210 204 204,6 200 190 199 245.9 roubles per barrel due to
Slide 34: CAPEX and investments in acquisition of property, plant and equipment
CAPEX and investments in the acquisition of property, plant and equipment In the second quarter of 2013, capital expenditures increased by 45.4% as compared CAPEX breakdown in 2Q 2013 to the first quarter of 2013 and totalled 8,462 million roubles. This increase was related mainly to higher capital
Slide 35: Control of debt portfolio
Control of debt portfolio Debt structure As of June 30, 2013, the total debt of the Group in the form of Short-term loans short-term and long-term borrowings amounted to 105,832 14,1% Bank loans million roubles compared to 125,186 million roubles as of 42,5% March 31, 2013; Bonds 105,8 52,2% 105,8 T
Slide 36: Appendix: Group Structure, Reorganization and Corporate Governance
Appendix: Group Structure, Reorganization and Corporate Governance
Slide 37: Commitment to Highest Governance Standards
Commitment to Highest Governance Standards OVERVIEW OF COMMITTEES GENERAL SHAREHOLDER MEETING Nomination and Remuneration Committee discusses major questions concerning the motivation and compensation systems for employees, provides recommendations as to how assess management’ performance Board of D
Slide 38: Experienced Board of Directors
Experienced Board of Directors Felix Evtushenkov Vitaliy Artyukhov Aleksey Buyanov Chairman of the Board of Directors of JSOC Bashneft Independent director, Member of the Budget and Audit Non-executive director, Member of the Audit Committee, 2008–2011 Vice President, Head of the Business Unit «Cons
Slide 39: Experienced Management Team
Experienced Management Team Alexander Korsik Viktor Gantsev President, Chairman of the Management Board Senior Vice President, Oil Refining and Petrochemicals 2006–2007 President of Itera 2006–2009 General Director, Ufaneftekhim 2007–2009 Chairman of the Board of Directors of Russneft May-October 20
Slide 40: Tax and Duty Regime
Tax and Duty Regime BASHNEFT MINERAL EXTRACTION TAX EXEMPTIONS MINERAL EXTRACTION TAX, RUB/BBL Relief on depleted fields with level of reserve depletion > 80% Relief on small fields with initial recoverable reserves of oil <5 mn t and level of reserve depletion < 5% MET relief on fields in Tatarstan
Slide 41: Reorganization Overview
Reorganization Overview Carried Out within the Announced Timeframe, in Compliance with the Russian Law and Market Practices March 2012 April 2012 October 2012 November 2012 End of February 2013 Conversion ratios and Extraordinary Meetings of Share conversion completed Additional share issues were A
Slide 42: Current Group structure
Current Group structure 50.59% * (50.59% **) Minority Sistema - Invest Sistema shareholders 50.10% * (57.26% **) 25.24% * (30.24% **) 49.41% * (49.41% **) 21.01% * (10.68% **) Bashneft Bashneft-Polyus 74.9% Upstream Refining 100% Service companies Marketing and Sales Note: (*) % of share capital (**
Slide 43: Reorganization of Oilfield Service Companies Will Improve Efficiency and Cost Controls
Reorganization of Oilfield Service Companies Will Improve Efficiency and Cost Controls LLC Bashneft-Service Assets, the oilfield service holding company, holds 11 oilfield service companies which have a market development potential Bashneft LLC Bashneft-Service Assets Market oilfield service compani
Slide 44: Bashneft's strategic goal in HSE is to become an industry leader
Bashneft’s strategic goal in the sphere of HSE is to become an industry leader among Russian companies The HSE committee, which The Company assumed Bashneft has adopted consists of eight members of Bashneft issued a responsibility protecting and is implementing the Board of Directors, statement rela
Slide 45: Thanks for your attention!
Thanks for your attention! 5, 1-st Tverskaya-Yamskaya, Moscow, 125047, Russia Tel: +7 495 228 – 15 – 96 Fax + 7 495 228 – 15 – 97 [email protected]
Bashneft — Russia: "The Inside Track" One-on-One Conference 2013 on 6ix