Rosneft · RUS:ROSN
Rosneft — Rosneft Oil Company — Q2 2016 Earnings Presentation
34 slides from Rosneft's earnings presentation, Aug 17, 2016
Slide 1: Rosneft Oil Company IFRS Results Q2 2016
Rosneft Oil Company IFRS Results Q2 2016 August 17, 2016
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
Slide 3: Overview of Key Developments
Overview of Key Developments Macroeconomic environment1 Indicator Q2 16 Q1 16 % H1 16 H1 15 % Urals, $/bbl 43.8 32.2 36.2% 38.0 57.3 (33.7)% Urals, th. RUB/bbl 2.89 2.40 20.2% 2.67 3.29 (18.9)% Naphta, th. RUB/ton 25.4 22.8 11.1% 24.3 27.5 (11.8)% Gasoil 0.1%, th. RUB/ton 26.7 22.9 16.6% 25.0 31.0 (
Slide 4: Key Operating Indicators
Key Operating Indicators Indicator Q2 2016 Q1 2016 % H1 2016 H1 2015 % Hydrocarbon production, incl. 5,216 5,208 0.2% 5,212 5,175 0.7% kboed Crude oil and liquids production, 4,111 4,089 0.5% 4,100 4,129 (0.7)% kbpd Gas production, 1,105 1,119 (1.3)% 1,112 1,046 6.3% kboepd Refining throughput, 22.4
Slide 5: Key Financial Indicators (RUB bln)
Key Financial Indicators (RUB bln) Indicator Q2 2016 Q1 2016 % H1 2016 H1 2015 % Revenue 1,232 1,048 17.6% 2,280 2,658 (14.2)% EBITDA 348 273 27.5% 621 670 (7.3)% Net profit 89 14 >100% 103 190 (45.8)% Net profit adjusted for one-off 154 93 65.6% 248 272 (8.8)% items1 Operating cash flow1 215 234 (8
Slide 6: Key Financial Indicators ($ bln)
Key Financial Indicators ($ bln) Indicator Q2 2016 Q1 2016 % H1 2016 H1 2015 % Revenue 19.2 14.5 32.4% 33.7 47.2 (28.6)% EBITDA 5.3 3.7 43.2% 9.0 11.8 (23.7)% Net profit 1.4 0.2 >100% 1.6 3.5 (54.3)% Net profit adjusted for one-off 2.3 1.3 76.9% 3.5 4.8 (27.1)% items1 Operating cash flow1 3.6 3.6 −
Slide 7: Operating Results
Operating Results
Slide 8: Development Drilling
Development Drilling Drilling footage Key achievements for H1 2016 th. m Increased footage in development drilling by 48% vs. H1 2015 with the share of in-house services in the total scope of work >50% All-time record for commissioning of new wells (1,218 +48% wells). Increased commissioning of
Slide 9: Hydrocarbon Production
Hydrocarbon Production kboed +0.7% 2 66 (36) 16 4 (13) (19) (6) 11 12 (5) (5) 10 5,175 5,212 H1 2015 Yugansk Orenburg Samotlor Purneftegaz Nyagan Slavneft Samara Severnaya Neft RN-Shelf Far Uvat Taas-Yuryakh Other Gas production H1 2016 East (N.Chaivo) Production growth in the greenfields and cont
Slide 10: Yugansk – Planned Oil Production Growth
Yugansk – Planned Oil Production Growth up to 68 mmt in the Mid-Term Average daily production in 2015-2019 ktd YNG provides for 31% of oil and gas condensate 190 production of the Company Current recoverable reserves of oil and gas condensate 180 in the amount of 2.7 bln tons allow raising the o
Slide 11: Progress of Projects in Nenets Autonomous Area
Progress of Projects in Nenets Autonomous Area Labagan Naul Commercial development started in Q3 2015 Commercial development is to start in Q4 2016 In June 2016 the average daily production reached Construction in progress of 2 pads, pressure pipeline more than 2.6 ktpd (20 km) and power cen
Slide 12: Progress in Key Projects in YaNAO and North of Krasnoyarsk Region
Progress in Key Projects in YaNAO and North of Krasnoyarsk Region Suzun East-Messoyakha1 Field commissioning is scheduled for September 2016 Field commissioning is scheduled for September 2016 Plateau is expected at ~4.5 mmt of oil in 2017 Production growth over 5 mmt of oil beyond 2018 75
Slide 13: Upstream Portfolio Optimization
Upstream Portfolio Optimization Vankor VCNG Taas-Yuryakh Attracting partners in the current projects: Partner: ONGC (15%, to Partners: Beijing Partners: BP (20%), 26%), pool of Indian Enterprises (20%) consortium of Indian Vankorneft investors (up to 23.9%) investors (29.9%) - Transaction with the
Slide 14: Gas Business: organic production growth and efficient monetization
Gas Business: organic production growth and efficient monetization Key achievements in H1 2016 Gas production 7% increase in gas production, mainly as a result of bcm +2,14 gas treatment facilities launch at Rospan at the end of (+7%) 33.23 2015 and Purneftegaz, and commissioning of 1 new 31.09 we
Slide 15: Refining
Refining Processing and production of motor fuel Key achievements in Q2 2016 Refining throughput in Russia Euro 4/5 gasoline share,% Euro 4/5 diesel share,% Light products yield in Q2 2016 increased to 56.2%, 24 100% refining depth to 71.2% 95% 95% 95% 90% 23 94% 95% 94% 80% 47% yoy increase in
Slide 16: Crude Oil and Petroleum Product Sales
Crude Oil and Petroleum Product Sales Netbacks of the main oil monetization channels Oil monetization structure (Q2 2016)¹ Refining Domestic market Export Refining capacity utilization rate 87% 89% 88% 88% 87% 90% 38% 85% 84% 78% 81% 378 366 367 365 358 $/t 347 349 322 310 279 277 277 258 3% 228 226
Slide 17: Financial Results
Financial Results
Slide 18: Revenue
Revenue Q2 2016 vs Q1 2016 RUB bln External factors: Internal factors: RUB +176 bln; +16.8% RUB +8 bln; +0.7% 7 9 8 301 (141) 1,232 1,048 Q1 2016 Exchange rate Crude oil price Exchange rate effects on Share in profits of associates Volumes Q2 2016 prepayments and JVs Growth in oil prices by 20% in
Slide 19: Operating Costs Dynamics
Operating Costs Dynamics Lifting costs Refining costs in Russia RUB/boe RUB/bbl 200 Costs 60% 180 Costs 60% Average LTM Average LTM % YoY 160 % YoY 147 150 165 164 40% 153 150 151 158 156 155 40% 120 134 133 24.0% 20.9% 100 20% 15.5% 15.9% 20% 9.7% 12.7% 4.0% 1.9% 3.8% -1.3% 60 50 0% 0% 0 -20% 0 -20
Slide 20: EBITDA and Net Income
EBITDA and Net Income EBITDA in Q2 2016 vs Q1 2016 RUB bln 17 (5) (2) (10) 3 65 9 (54) 52 Internal and seasonal factors: 348 RUB +13 bln; +4.8% 273 External factors: RUB +62 bln; +22.7% Q1 2016 Exchange rate Crude oil price Share in profits of Export duty lag Change in other taxes Volume Intragroup
Slide 21: EBITDA and Net Income Compared to Global Peers
EBITDA and Net Income Compared to Global Peers EBITDA in USD terms Q2 2016 vs Q1 2016 H1 2016 vs H1 2015 Brent 45.2% 82.0% 43.2% -23.7% Rosneft 26.1% -36.0% Global peers 13.8% -36.5% Brent -8.3% -37.4% Rosneft -79.1% -45.1% 34.4% -31.4% Global peers Net income in Q2 2016 $ bln Rosneft 1.7 One of t
Slide 22: CAPEX
CAPEX Capex and production RUB bln kboepd Increase in Upstream H1 2016 CAPEX (+33%) YoY, 5 600 focusing on meeting the strategic goals in hydrocarbon 900 production growth: 4 200 Intensification in development drilling 600 533 595 start of active development phase of new major oil 2 800 and ga
Slide 23: Free Cash Flow
Free Cash Flow Free Cash Flow RUB bln Full year As a result of complicated marco environment, 657 increased fiscal burden and growing investments the H1 596 free cash flow reduced by 59% to RUB 141 bln in H1 2016 Rosneft retains its leadership in the global oil and gas 340 sector in terms of the
Slide 24: Financial Stability
Financial Stability Debt and net debt dynamics $ bln1 80 1.7 1,8 Credit portfolio management: 70 1,6 Over the last 12 months, total debt decreased by 60 1.2 1.2 1.3 1,4 15.8%, net debt – by 41% 1.1 1,2 50 14.4 1,0 In 2Q 2016, total debt decreased by 3.8%3, net 40 23.0 22.4 23.6 22.3 0,8 debt w
Slide 25: Appendix
Appendix
Slide 26: Revenues
Revenues H1 2016 vs 1H 2015 RUB bln External factors: Internal factors: RUB -429 bln; -16% RUB +51 bln; +2% 356 (766) (27) 8 50 1 2,658 2,280 H1 2015 Exchange rate Crude oil price Exchange rate effects Share in profits of Volumes Other H1 2016 on prepayments associates and JVs Decline in oil price
Slide 27: Costs Dynamics H1 2016 vs H1 2015
Costs Dynamics H1 2016 vs H1 2015 Lifting costs RUB bln 5 Growing electricity costs (increased tariffs and watercut) (1) (2) 2 and higher HC lifting expenses were partially offset by the 137 141 planned reduction in wellwork costs and current workovers and power equipment maintenance costs coupled
Slide 28: EBITDA and Net Income
EBITDA and Net Income EBITDA – 1H 2016 vs. 1H 2015 RUB bln External factors: Internal factors: RUB -64 bln; -9% RUB +15 bln; +2% 169 (220) 64 (52) (17) (4) 8 (16) 14 7 (2) 670 621 H1 2015 Exchange rate Crude oil price Share in profits of Export duty lag Tax manoeuvre Change of other tax Transport ta
Slide 29: FX Exchange Risk Hedge
FX Exchange Risk Hedge Q2 2016, RUB bln H1 2016, RUB bln Net of income Net of income Before tax Profit tax Before tax Profit tax tax tax Recognized within other funds and reserves as of the start of the (553) 111 (442) (590) 118 (472) period Exchange rate differences materialized for foreign exchang
Slide 30: Adjusted Operating Cash Flow Calculation
Adjusted Operating Cash Flow Calculation Profit and loss statement Cash flow statement H1 2016, $ H1 2016, $ # Indicator Indicator # bln bln 1 Revenue, incl. 33.7 1.6 Net income 1 Adjustments to reconcile net income 6.5 2 to cash flow from operations Prepayment offset amount 1.8 Changes in operating
Slide 31: Export Duty Lag
Export Duty Lag RUB bln (43) 23 (62) (31) (14) 52 362 351 359 348 319 328 297 309 296 278 287 273 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Normalized EBITDA Actual EBITDA Note: The effect of the time lag in the establishment of import duties on the Company's EBITDA stands apart on this slide, i.e. (unlik
Slide 32: Financial Costs, RUB bln
Financial Costs, RUB bln Indicator Q2 16 Q1 16 % H1 16 H1 15 % 1. Interest accrued1 34 36 (5.6)% 70 72 (2.8)% 2. Paid interest 29 42 (31.0)% 71 67 6.0% 3. Change of interest payable (1-2) 5 (6) – (1) 5 – 4. Capitalized interest2 14 15 (6.7)% 29 22 31.8% Net (income)/loss from operations with 5. (2)
Slide 33: EBITDA and Net Income Sensitivity
EBITDA and Net Income Sensitivity Urals price Exchange rate RUB bln -9.1 $/bbl +9.1 $/bbl RUB bln -8.8 RUB/$ +8.8 RUB/$ EBITDA EBITDA (80) 80 (59) 59 Net income Net income (64) 64 (47) 47 Average Urals price in Q2 2016 amounted to $43.4/bbl If the average price of the said period had retained at $
Slide 34: Questions and Answers
Questions and Answers