Gazprom Neft · RUS:SIBN
Gazprom Neft — Q2 2011 Earnings Presentation
30 slides from Gazprom Neft's earnings presentation, Aug 3, 2011
Slide 1: US GAAP Financial and Operating Results for Second Quarter 2011
US GAAP Financial and Operating Results for Second Quarter 2011 3 August 2011
Slide 2: Management participating in this call
Management participating in this call Alexey Yankevich Head of Economics and Corporate Planning Directorate Boris Zilbermints Deputy Chairman of the Management Board Deputy CEO for Exploration and Production Vladimir Konstantinov Head of Economics and Investment Department Refining and Marketing Div
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
Slide 4: Agenda
Overview Highlights Macro Environment Upstream Downstream Financials Q&A Appendix 44
Slide 5: Strong financial performance while advancing on 2020 strategic goals
Strong financial performance while advancing on 2020 strategic goals Financial performance in 1H 2011: • Revenue: US$ 21,341 mln (+39.3% Y-o-Y) • EBITDA: US$ 4,945mln (+57.7% Y-o-Y) • Net Income: US$ 2,604 mln (+73,5% Y-o-Y) Continued operational progress : • 7.7% Y-o-Y production increase (boe)
Slide 6: Macro Environment
Macro Environment Improved domestic product prices, stronger ruble 66
Slide 7: Domestic product prices recover to align with high global crude price environment
Domestic product prices recover to align with high global crude price environment Brent, $/bbl Average exchange rate Inflation (PPI), % Omsk refinery netback prices $/tonne for unleaded 92 petrol 650 Growth in global crude and product prices 550 New export duties on gasoline and naphtha 450 350
Slide 8: Upstream
Upstream New projects on track, upgrading production base 88
Slide 9: New projects driving domestic growth while international expansion continues
New projects driving domestic growth while international expansion continues 1Н11 Key Events: 2011 Major Goals: New Source Cenomanian gas: full scale production Cenomanian gas: produce 3.2 MMtoe Messoyakha: seismic complete; drilling Messoyakha: complete development plan, exploration wells;
Slide 10: Production growth continues for fourth straight quarter
MMToe M Kboepd k Mtoe Production growth continues for fourth straight quarter Group hydrocarbon production +8% +1% Total Group hydrocarbon production increased by SPD was a key contributor to production 1.2% Q-o-Q and 7.7% Y-o-Y from equity affiliates, growing by 2.7% Q-o- Q and 10.3% Y-o-Y Cr
Slide 11: Modern technology will drive improved recovery at older fields
Modern technology will drive improved recovery at older fields ▪ Gazprom Neft and Schlumberger signed a technology cooperation agreement to increase E&P efficiency in Gazprom Neft‟s domestic and international operations ▪ Weatherford partnership will accelerate technology application (in the stage o
Slide 12: MET relief raises profitability of Projects in YNAO, but further tax reforms still necessary
MET relief raises profitability of Projects in YNAO, but further tax reforms still necessary Company Field Accumulated Tax relief Yamal peninsula Gydan Production* effect** Messoyakha 50 MMTonnes 98.6 bln RUB SeverEnergy 33.3 MMTonnes 33.4 bln RUB Exploration Total GPN 83.3 MMTonnes 132 bln RUB ME
Slide 13: New projects gain significant value under new tax incentives
New projects gain significant value under new tax incentives • 100% (Gazprom transfer) • 50% (JV with TNK-BP) • Reserves: 404 MmToe 2012-2021 MET relief (approved 21 July) • Reserves: 513 MmToe • Startup: 2014 • Startup: 2015 and “60-66” tax regime adds ~16% to • Peak: 13.1 MmToe at 2021 • Peak: 33.
Slide 14: Downstream
Downstream Fuel quality upgrades and increase in marginal sales add value to industry-leading portfolio 14 14
Slide 15: Refinery modernization raises fuel quality, drive continued premium sales growth
Refinery modernization raises fuel quality, drive continued premium sales growth 2Q11 Key Events: 2011 Major Goals: Refining Refining volumes up 19% 2Q Begin construction of isomerization 2010/2Q 2011 units at Moscow and Yaroslavl Omsk started production of refineries to improve gasoline quali
Slide 16: Upgraded fuel quality adds value to increased refining runs
Upgraded fuel quality adds value to increased refining runs Gazprom Neft refining throughput Gazprom Neft gasoline and diesel yields (MMTonnes) 2Q10 2Q11 MMTonnes +9.4% +18.9% 12 Gasoline 11% 21% 10.32 28% 10 0.67 9.43 8.68 1.68 0.51 1.6 2.1 0.71 1.74 8 1.65 72% 2.73 68% 6 2.57 = < Class 3 1.65 = Cl
Slide 17: Utilizing higher netbacks by channeling crude to Refining
70 20 Utilizing higher netbacks by channeling crude to Refining MMTonnes Gazprom Neft Crude mix $/bbl Gazprom Neft average netbacks Refining netbacks remain strong Crude export profitability down from March 2011 highs due to: - Lag in crude oil export duty - Stabilizing oil price environment H
Slide 18: High growth premium channels continue strong performance
High growth premium channels continue strong performance Y-o-Y 2Q premium* Market share** sales increase G-Drive premium branded motor fuel achieved 16% share of high octane market in Saint 37% Petersburg Retail Increased G-Family lubricants international sales volume by 51% 2.7 times Y-o-Y Lubr
Slide 19: Financials
Financials Strong results on higher volumes and prices 19 19
Slide 20: Volume and pricing strength leverage 74% net income expansion Y-o-Y
Volume and pricing strength leverage 74% net income expansion Y-o-Y Increased sales volume and higher crude and petroleum prices drove 16.3% revenue Revenues increase US$ mln Average Urals price increased10.8% Q-o-Q and 42% Y-o-Y Strong revenue performance as well as improved sales mix driving
Slide 21: Y-o-Y EBITDA growth driven by price, volume and improved sales mix
Y-o-Y EBITDA growth driven by price, volume and improved sales mix Management effectiveness = 405 4,945 OPEX = - 172 SG&A = - 29 Exploration expenses = 11 3,136 Changes in Net price = 1 386 21 21
Slide 22: Volumes and tariffs growth lead to larger Opex
Volumes and tariffs growth lead to larger Opex 22 22
Slide 23: Free cash flow boosted due to working capital stabilization
Free cash flow boosted due to working capital stabilization Cash reconciliation:. 1H11 vs. YE2010 US$ mln Free cash flow 23 23
Slide 24: Growth and improvement program continues to drive capex
Growth and improvement program continues to drive capex Capex Comparisons (US$ mln) 45,9% Capital spending program continues to focus 21,5% on growth and competitive improvement 893 4 67 157,7% Quarterly E&P capex up 27.5% vs. 1Q due to 735 +21,8% 28.4% increase in production drilling 14 191 55
Slide 25: Continued commitment to capital discipline and debt optimization
Continued commitment to capital discipline and debt optimization Gearing ratio and maturity mix Debt by currency Signed US$ 600 mln unsecured 5 year Net debt/EBITDA 0.8 vs. target < 1.5 club deal in April 2011 Share of short term debt decreased by 10.3 Average debt maturity increased by p.p.
Slide 26: Questions & Answers
0 cazpnom NE F T Questions & Answers
Slide 27: Appendix
0 cazpnom NE F T Appendix
Slide 28: Q-o-Q EBITDA growth was tempered by duty lag effect
Q-o-Q EBITDA growth was tempered by duty lag effect Management effectiveness = 164 2,467 2,478 Changes in Net Price = -49 OPEX = -10 SG&A = 78 Exploration expenses = 11 28 28
Slide 29: Q-o-Q Opex growth driven by real Ruble appreciation and increase in upstream activity
Q-o-Q Opex growth driven by real Ruble appreciation and increase in upstream activity 29 29
Slide 30: Units
Units bbl barrel boe barrel of oil equivalent tonne metric ton toe tonnes of oil equivalent MMTonnes million tonnes MMbbl million barrels MMboe million barrels of oil equivalent Mmtoe million tonnes of oil equivalent bcm billion cubic metres mcm thousand cubic metres MMm3 million cubic metres bcf bi