Gazprom Neft · RUS:SIBN
Gazprom Neft — Q1 2011 Earnings Presentation
29 slides from Gazprom Neft's earnings presentation, May 12, 2011
Slide 1: US GAAP Financial and Operating Results for First Quarter 2011
US GAAP Financial and Operating Results for First Quarter 2011 12 May 2011
Slide 2: Management participating in this call
Management participating in this call Alexey Yankevich Head of Economics and corporate planning directorate Alexander Dybal Member of the Management Board, Deputy CEO for Corporate Communications Victor Saveliev Head of Exploration and Development Directorate Vladimir Konstantinov Head of Economics
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: Overview
Overview Highlights Macro Environment Upstream Downstream Financials Q&A Appendix 44
Slide 5: Continued income growth and execution on strategy to 2020
Continued income growth and execution on strategy to 2020 Delivered strong financial performance • Revenue: US$ 9,865 mln (+9% Q-o-Q; +35% Y-o-Y) • EBITDA: US$ 2,467 mln (+19% Q-o-Q; +56% Y-o-Y) • Net Income: US$ 1,437 mln (+47% Q-o-Q; +91% Y-o-Y) Grew hydrocarbon production by 8% Y-o-Y as Cenom
Slide 6: Macro Environment
Macro Environment Strengthening crude price and ruble 66
Slide 7: Higher crude prices contribute to strengthening ruble and inflation pressure
Higher crude prices contribute to strengthening ruble and inflation pressure Brent, $/bbl Average exchange rate Inflation (PPI), % Russian retail demand, MMtonnes Higher global crude and product prices Gasoline demand Diesel demand Continued recovery in Russian product demand Ruble appreciatio
Slide 8: Upstream
Upstream New projects on track, hydrocarbon production rises 88
Slide 9: New projects driving domestic growth while international expansion continues
New projects driving domestic growth while international expansion continues 1Q11 Key Events: 2011 Major Goals: New Source Cenomanian gas full scale Produce 3.2 MMtoe Cenomanian gas production Messoyakha: complete development plan, Messoyakha seismic and drilling exploration drilling Orenb
Slide 10: Steady production growth continues, driven by Cenomanian gas
MMtoe kboepd Steady production growth continues, driven by Cenomanian gas Group hydrocarbon production +8% +1% 4th consecutive quarter hydrocarbon Seasonal production decrease at Salym production growth Petroleum due to planned surveillance and reconstruction works Cenomanian gas – major drive
Slide 11: Higher average well flows, expanded activity at 100% owned fields
500 160 120 wells units tonnes/day Higher average well flows, expanded activity at 100% owned fields New wells and average new well flow Other E&P activities Improved flow rates from new wells Recovery Q-o-Q in primary operations at Slight seasonal decline in drilling activity 100% owned field
Slide 12: Cenomanian gas will drive full year 2011 growth
Sales Cenomanian gas will drive full year 2011 growth Sales volumes, bcm ▪ Muravlenko and Novogodneye Cenomanian gas fields started up 4Q2010 ▪ Cumulative production of ~500,000 mcm through 31.12.10 ▪ 2011 estimated production of 3.4 MMtoe (4.2 bcm) ▪ 51.2 MMtoe in ABC1 reserves ▪ First implementati
Slide 13: Phase 2 of South Priobsky gas turbine power station will reduce opex
Phase 2 of South Priobsky gas turbine power station will reduce opex South Priobsky GTPS key data ▪ Located 70 km south of Khanty-Mansiysk ▪ Phase 1 startup December 2009 48 MW ▪ Phase 2 startup December 2010 48 MW ▪ Capex: US$ 160 mln (4.8 billion rubles) ▪ Annual electricity output – 757 MMkWh ▪ P
Slide 14: Downstream
Downstream Stronger margins; modernization program on schedule 14 14
Slide 15: Refinery modernizations raise fuel quality, drive premium sales growth
Refinery modernizations raise fuel quality, drive continued premium sales growth 1Q11 Key Events: 2011 Major Goals: Refining Begin construction of isomerization units at Moscow and Yaroslavl Refining volumes up 5% Y-o-Y refineries to improve gasoline quality Upgrade and construct fuel quality-
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 & diesel yields, % (labels in MMTonnes) MMTonnes 12 -6.1% Gasoline yield Diesel yield +5.3% 10,05 10 9,43 8,96 0,65 -21.6% -22.7% 0,51 0,66 1,90 8 1,74 gasoline available for sale in Ru
Slide 17: Seasonal drop in crude and product sales
70 20 Seasonal drop in crude and product sales MMTonnes Gazprom Neft sales mix Gazprom Neft average netbacks 16 +5.6% -5.0% 14,53 13,81 14 0,73 13,08 -6.8% 0,68 -4.2% 0,71 12 3,89 3,47 -11.0% -10.8% 3,90 10 8 -0.4% 5,45 +23.7% 5,43 4,39 6 Several factors drove crude export profitability to 4 0,36
Slide 18: Continuing focus on high-margin premium channels
Continuing focus on high-margin premium channels Y-o-Y 1Q premium* National retail sales increase market share Introduced G-drive branded premium motor fuel Completing reconstruction and rebranding campaigns Retail Launched “Winter Story” national advertising campaign Began sales of G-Energy
Slide 19: US$ 87 mln losses following domestic price cuts
US $ 87 mln losses following domestic price cuts Petroleum product retail prices Netback, March 2011, Downstream losses Omsk, Rub/liter Omsk, $/tonne following price cap, US$ mln Regular Diesel Fuel 25 March/ Winter January gasoline oil Diesel 24 Premium 550 23 gasoline -6% 464 (101) 14 473 22 Regul
Slide 20: Financial Results
Financial Results Strong performance on expanded production and higher crude prices 20 20
Slide 21: Expanded volumes and pricing strength leverage net income expansion
Expanded volumes and pricing strength leverage 93.1% net income expansion Y-o-Y Revenue increases driven by hydrocarbon production volumes and prices Revenues Average Urals price increased US$ mln 20.4% Q-o-Q and 36.2% Y-o-Y Revenue strength as well as a shift of sales mix to a more marginal d
Slide 22: Y-o-Y EBITDA growth driven by price and volume increases
Y-o-Y EBITDA growth driven by price and volume increases, tempered by higher taxes and costs EBITDA 1Q 2011 vs 1Q 2010(US$ mln) 2,467 1,586 Change in netbacks = 1 132 OPEX = - 47 SG&A = - 35 Exploration expenses =2 22 22
Slide 23: Volume increases leading to larger Opex Y-o-Y
Volume increases leading to larger Opex Y-o-Y Opex reconciliation: 1Q10 vs. 1Q11 578 23 23
Slide 24: Borrowings used for Sibir, NIS acquisitions
Borrowings used for Sibir, NIS acquisitions Cash reconciliation: 4Q10 vs. 1Q11 US$ mln 24 24
Slide 25: Continued commitment to capital discipline and debt optimization
Continued commitment to capital discipline and debt optimization Gearing ratio and maturity mix By category By currency Other Russian 5% banks EURO OTHER 14% 1% 1% Ruble RUR bonds 35% 31% International DCM USD 31% 63% PXF 19% Net debt/EBITDA 1.0 vs. target < 1.5 April 2011 agreement reduces inte
Slide 26: Capex program ensures future growth
Capex program ensures future growth Capex Dynamics (US$ mln) Capex up 1% Y-o-Y, down 35% Q-o-Q Q-o-Q upstream capex decline due to seasonal factors Marketing capex decline amid ramp down of rebranding campaign Drop in refining capex follows completion of Omsk isomerization unit 2011E capex
Slide 27: Board has recommended dividend equivalent to 22% of Net Income
Board has recommended dividend equivalent to 22% of Net Income, subject to AGM confirmation The AGM will take place at 11:00 on 9 June 2011 at the offices of Gazprom (16 Nametkina St, Moscow) Eligibility to participate in the AGM and receive dividends will be based on the share register as at th
Slide 28: Questions & Answers
0 cazpnom NE F T Questions & Answers
Slide 29: 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