Rosneft · RUS:ROSN
Rosneft — Rosneft Oil Company — FY2019 Earnings Presentation
33 slides from Rosneft's earnings presentation, Feb 19, 2020
Slide 1: Rosneft Oil Company IFRS Results Q4 and 12M 2019
Rosneft Oil Company IFRS Results Q4 and 12M 2019 February 19, 2020
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: ESG is the Key Company Development Pattern
ESG is the Key Company Development Pattern September 2019 - The Russian Federation ratifies the Paris Rub 300 bn of “green” investments in 2018-2022 Climate Agreement 8 mmt of CO2e prevented GHG emissions (by implementing Energy Saving Program) UN Secretary-General Antоnio Guterres called on all lea
Slide 4: Top Quartile Industry Performance in International ESG Ratings
Top Quartile Industry Performance in International ESG Ratings The best Russian oil and gas company in the Global CDP climate change and water security Rosneft included in the FTSE4Good Index rating The FTSE Russell rating increased by 0.3 points to 3.8 The climate change rating increased by four no
Slide 5: Financial Results
Financial Results 5
Slide 6: 2019 Key Highlights
2019 Key Highlights 283 Rub bn Record high dividends 884 Rub bn Strong free cash flow 907 Rub bn Reduction of financial debt and trading liabilities 6
Slide 7: EBITDA and Net Income Dynamics
EBITDA and Net Income Dynamics EBITDA 2019 vs 2018 Net Income 2019 vs 2018 Net income attr. 12M 2018 Rub bn to shareholders Rub bn 2,081 549 12M 2018 Exchange rate 83 Minorities 100 Completion of the tax maneuver (29) 12M 2018 649 and other Crude oil price (161) EBITDA 24 Share in profits of Externa
Slide 8: CAPEX
CAPEX CAPEX evolution 2019 CAPEX breakdown Rub trln 91% Upstream Mature assets 7% Key projects and greenfields 0.85 52% International projects ~1 Rub trln 8% Refining, Commerce 0.92 0.94 32% and Logistics 0.85 2% Other 2017 2018 2019 2020 plan 6,1 $/boe > 90% ~ 270 Rub bn ~ 14% Unit Upstream CAPEX S
Slide 9: Free Cash Flow Allocation
Free Cash Flow Allocation Free cash flow calculation Net cash Rub bn provided by 1,110 operating activities Reimbursement of Free cash prepayments received 344 flow (historical FX rate) Reimbursement of other financial 172 obligations FX rate change Interest1 effect 113 Interest on prepayments 70 Pr
Slide 10: Delivering Rosneft-2022 Strategy in 2019
Delivering Rosneft-2022 Strategy in 2019 3.1 $/boe leadership in lifting costs1 Enhancing yields -13.8% reduction of well costs 2 refining and petrochemicals >2.5% cost reduction3 Key projects 22.5 mmt liquids production at key projects delivery liquids production from 21 mmt hard-to-recover reserve
Slide 11: Oil Market Volatility
Oil Market Volatility Crude oil and high-sulphur fuel oil prices Gross upstream margin1 90 $/bbl 0 12 ‘000 Rub/t Brent Monthly average Urals FY average HSFO-Brent crack spread 80 -10 9 70 -20 6 60 -30 50 -40 3 Note: (1) Calculated as Urals price less MET, export customs duty and transportation costs
Slide 12: Efficient Cost Control
Efficient Cost Control Lifting costs Refining costs in Russia Rub/boe Quarter 12M average % YoY Rub/bbl Quarter 12M average % YoY 199 202 215 213 220 205 203 201 196 191 183 195 23.8% 12.0% 8.9% 5.4% 5.7% 6.1% 3.0% 4.1% 2.3% -4.4% Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 General a
Slide 13: Financial Summary
Financial Summary Record high EBITDA 2,081 2,105 2018 2019 Net income growth by 29% 708 549 2018 2019 Amount of dividends paid increased by more than 1/4 283 225 2018 2019 13
Slide 14: 2020+ Growth Drivers
2020+ Growth Drivers 1 2 3 Operational Financial Accounting Change in the structure of Introduction of new tax Impairment of assets in 1Q crude oil production to higher- incentives for the Priobskoye oil 2019 of RUB 90 bln creates a margin barrels field low-base effect for 2020 Proceeds from
Slide 15: Operating Results
Operating Results 15
Slide 16: Production
Production Liquids production Rapid development of new large projects with incremental production growth of up to 5.0 mmbpd 200 mmcmd 140.3 mmbbl (+27% vs 2018) liquids 170 Accelerated development of hard-to-recover gas 140 low taxed reserves ensuring production 4.8 2017 2018 2019 growth up to 1
Slide 17: Efficient Application of Advanced Technologies
Efficient Application of Advanced Technologies Commissioning of new wells Continuous work on improving new wells design aimed at enhancing field development efficiency: wells total The share of horizontal wells increased to 57% of total horizontal wells (+21 p.p. vs 2017) with multi-stage hydrofra
Slide 18: Near-term Plans
Near-term Plans Enhancing returns through continuous efficiency improvement 250 mmt Liquids production growth by 2022 Gas production growth with >100 bcm domestic market increase to by 2022 20% Full development of large-scale >160 kbd projects (Erginskiy block, Chaprovskoye, Severo- total fields’ pr
Slide 19: Refining
Refining Refining margins Refining economics in Q4 2019 Россия Russia 1 Европа Europe $/bbl Q4 2019 refining margin in Russia was negatively impacted by current macro environment: falling HSFO prices ahead of 9.23 IMO implementation. Moreover, refining 7.62 7.78 throughput reduced following turnar
Slide 20: Focus on Distribution Channels Development
Focus on Distribution Channels Development Netbacks for the main crude oil marketing channels Crude oil marketing breakdown Нетбэк экспорта Export, Asia в направлении Азии Нетбэк экспорта Export, Europeв направлении Европы mmt Нетбэк переработка Refining in Russia Нетбэк вн.рынок Domestic market 430
Slide 21: Premium Marketing Channels Development
Premium Marketing Channels Development Avia Bunker fuel Lubes Bitumen Key achievements Jet supplies to the airports of In 2019 RN-Bunker started Introduction of new motor oil New innovative product sales, the Moscow Air Cluster bunkering of environmental with extended drain interval polymer-bitumen
Slide 22: Progress in Development of the Retail Channel
Progress in Development of the Retail Channel Retail By-product sales 6% - increase of motor fuel sales 1 2% - by-product and services revenues growth 1 16% - increase of sales using fuel cards 1 6% - increase of hot beverages sales 1 Key achievements Efforts undertaken Increasing the number of loya
Slide 23: Appendix
Appendix 23
Slide 24: Key Operational Highlights
Key Operational Highlights Indicator Q4 2019 Q3 2019 % 2019 2018 % Hydrocarbon production, incl. 5,814 5,740 1.3% 5,791 5,795 (0.1)% kboed Liquids 4,674 4,661 0.3% 4,674 4,673 0.0% kbpd Gas 1,140 1,079 1,117 1,122 5.7% (0.4)% kboed Oil refining 28.33 30.07 (5.8) % 110.23 115.04 (4.2)% mmt Product ou
Slide 25: Key Financial Highlights
Key Financial Highlights Indicator Q4 2019 Q3 2019 % 2019 2018 % EBITDA, Rub bn 488 554 (11.9)% 2,105 2,081 1.2% Net Income, Rub bn 158 225 (29.8)% 708 549 29.0% attributable to Rosneft shareholders Adjusted net income1, Rub bn 184 262 (29.8)% 917 828 10.7% attributable to Rosneft shareholders Adjus
Slide 26: EBITDA and Net Income Dynamics
EBITDA and Net Income Dynamics EBITDA Q4 vs Q3 2019 Net income Q4 vs Q3 2019 Net income Q3 2019 Rub bn attr. to shareholders Rub bn 554 225 Q3 2019 Exchange rate (12) Minorities 25 MET rate (11) Q3 2019 250 Crude oil price External (35) EBITDA (66) factors: Share in profits of -48 Rub bn -8.7% 2 DDA
Slide 27: Key Projects Development
Key Projects Development Severo-Komsomolskoye Lodochnoye 3Р reserves (PRMS) - 269 mmtoe 3Р reserves (PRMS) - 85 mmtoe 1st phase of the full Startup preparation is underway field development 2019 production – 0.64 mmt (>100% vs 2018) started 16 wells drilled in 2019 2019 production – 0.3 mmt1 (>100%
Slide 28: Progress on Key Projects: Rospan
Progress on Key Projects: Rospan MAJOR DRIVER OF THE COMPANY NEAR-TERM PRODUCTION GROWTH Indicator Value 897 bcm of gas 3Р reserves (PRMS) 204 mmt of gas condensate, LPG and oil 6.7 bcm of gas 2019 production 1.38 mmt of liquids Potential: > 21 bcm of gas Annual production > 5 mmt of liquids up to 1
Slide 29: Gas Greenfields Development: Kharampur
Gas Greenfields Development: Kharampur THE MOST SIGNIFICANT (AFTER ROSPAN) PROJECT IN TERMS OF GAS PRODUCTION GROWTH1 Indicator Value 3Р reserves (PRMS), gas 735 bcm2 Gas production plateau: c. 11 bcmpa3 Phase 1 (Senomanian) Commissioning year 2021 Current status and Q4 2019 results: Construction
Slide 30: Calculation of Adjusted OCF
Calculation of Adjusted OCF Profit and Loss Statement Cash Flow Statement 2019, 2019, № Indicator Indicator № $ bn $ bn 12.4 Net income 1 1 Revenue, incl. 135.8 Adjustments to reconcile net income to 10.9 2 cash flow from operations, incl. Reimbursement of prepayments and 9.8 Reimbursement of prepay
Slide 31: Finance Expenses, Rub bn
Finance Expenses, Rub bn Indicator Q4 2019 Q3 2019 % 2019 2018 % 1. Interest accrued1 67 70 (4.3)% 282 282* – 2. Interest paid and offset2 72 70 2.9% 283 284 (0.4)% 3. Change in interest payable (1-2) (5) – – (1) (2) (50.0)% 4. Interest capitalized3 37 39 (5.1)% 158 147 7.5% 5. Net loss from operati
Slide 32: Variance Analysis
Variance Analysis 2019 EBITDA and net income sensitivity to 2019 EBITDA and net income sensitivity to +/- 10% change in Urals price +/- 10% change in Rub/$ exchange rate Rub bn млрд руб. EBITDA EBITDA (283) 283 (344) 344 Net income Net income (226) 226 (275) 275 -10% 63.4 +10% -10% 64.7 +10% $/bbl R
Slide 33: Questions & Answers
Questions & Answers 33