Galp Energia, Sgps S.a. Class B · EURONEXT:GALP

Galp Energia, Sgps S.a. Class B — Galp Energia — H1 2007 Earnings Presentation

30 slides from Galp Energia, Sgps S.a. Class B's earnings presentation, Aug 9, 2007

  1. Slide 1: First Half 2007 Results

    FIRST HALF 2007 RESULTS Lisbon, 9 August 2007

  2. Slide 2: Disclaimer

    DISCLAIMER Matters discussed in this presentation may constitute forward-looking statements. Forward-looking statements are statements other than in respect of historical facts. The words “believe,” “expect,” “anticipate,” “intends,” “estimate,” “will,” “may,” "continue," “should” and similar expres

  3. Slide 3: Adjusted EPS increased by 71% to €0.34

    ADJUSTED EPS INCREASED BY 71% TO €0.34 IFRS Adjusted H106 H107 % Ch. € Million H106 H107 % Ch. 6,130 5,894 (3.9%) Sales 6,054 5,890 (3.0%) 615 627 2.0% EBITDA 404 481 19.2% 475 498 4.8% EBIT 264 360 36.4% 19 31 59.4% Income from Associates 19 31 59.4% 354 401 13.4% Net Income 167 285 71.0% 0.43 0.48

  4. Slide 4: Significant inventory effect due to increase in oil prices

    SIGNIFICANT INVENTORY EFFECT DUE TO INCREASE IN OIL PRICES H1 2007 EBITDA (M€) H1 2007 Net Income (M€) (142) (4) (118) 627 3 481 401 285 IFRS Inventory Non Adjusted IFRS Inventory Non Adjusted holding recurrent holding recurrent effect items effect items YoY +2.0% +19.2% +13.4% +71.0% 4 First Half 2

  5. Slide 5: Proforma adjusted EBITDA increased by 36%

    PROFORMA ADJUSTED EBITDA INCREASED BY 36% • E&P boosted due to block 14 sustained production and by higher crude prices • R&M higher contribution driven by higher refining margins and larger marketing volumes • Strong G&P performance driven by the increase in trading volumes H1 2007 Adjusted EBITDA1

  6. Slide 6: Market Overview

    MARKET OVERVIEW © galp energia

  7. Slide 7: Strong gasoline crack driven by strong demand and lower refining availability

    STRONG GASOLINE CRACK DRIVEN BY STRONG DEMAND AND LOWER REFINING AVAILABILITY Rotterdam Cracking and Rotterdam Brent price (Usd/bbl) (Hydro + Aromatics)4 (Usd/bbl) 75 10 70 8 65 6 60 4 55 2 50 0 45 40 -2 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jan-06 Mar-06 May-06 Jul-06 Sep-0

  8. Slide 8: Opposite trends in the oil and natural gas market in Portugal

    OPPOSITE TRENDS IN THE OIL AND NATURAL GAS MARKET IN PORTUGAL • Portuguese oil market affected by higher prices relatively to Spain due to tax effect • Electrical natural gas consumption almost recovered despite stronger hydro this year • Natural gas market, excluding power generation, rose by 5% Ib

  9. Slide 9: Business Overview

    BUSINESS OVERVIEW © galp energia

  10. Slide 10: Stable E&P production until Tombua Lândana start up

    STABLE E&P PRODUCTION UNTIL TOMBUA LÂNDANA START UP • Production sustained by BBLT lighter crude production • Lighter TL crude production offsetted decrease in heavy Kuito crude production Total Equity Production by Field (million bbl) TL 2.5 BBLT Kuito 1.2 0.8 0.4 Q2 06 Q2 07 H1 06 H1 07 WP Kbbl/d

  11. Slide 11: E&P delivering growth

    E&P DELIVERING GROWTH • Strong EBIT qoq due to higher prices and subsequent operational leverage • H1 07 EBIT already surpassed 2006 EBIT • Proforma H1 06 EBIT affected by definition of accounting principles Adjusted EBIT (M€) 285%1 56 34 Proforma: 15M€1 6 2 Q2 06 Q2 07 H1 06 H1 07 1 E&P H106 profor

  12. Slide 12: Galp Energia refining margin up 25% YoY

    GALP ENERGIA REFINING MARGIN UP 25% YOY • Spread over benchmark of 1.7 Usd/bbl in first half of 2007 • Premium to benchmark affected by lower utilization due to maintenance shutdown Galp Energia vs Benchmark Refining Margin (Usd/bbl) Spread over Benchmark Benchmark 7.28 6.08 6.23 5.74 4.97 1.55 4.39

  13. Slide 13: Stronger business profile

    STRONGER BUSINESS PROFILE • Increased Galp presence in Iberian market • More valuable export product mix due to increase of gasoline export to the US • Decrease in raw material processed due to maintenance shutdown Million tons H1 2006 H12007 % Ch. Crude oil and other refinery inputs 7.4 7.1 (4%) pr

  14. Slide 14: Sales to direct clients supported by Spanish operations

    SALES TO DIRECT CLIENTS SUPPORTED BY SPANISH OPERATIONS • Sales to Galp Energia direct customers represented 65% of total raw materials processed • Retail market share increasing in Portugal despite market decrease H1 2007 marketing volumes (M ton) 1.1 4.7 Portugal 2.3 0.2 Spain (1%) YoY 1.1 +9% Ret

  15. Slide 15: R&M EBIT boosted by Q2 refining margin

    R&M EBIT BOOSTED BY Q2 REFINING MARGIN • Reported EBIT positively impacted by inventory effect of 152 M€ • Q2 adjusted EBIT almost double yoy, rose by 84% • Adjusted EBIT up 55% yoy supported by higher marketing volumes and stronger refining margin EBIT (M€) 343 343 55% Q2 259 242 191 Q1 123 116 63

  16. Slide 16: Natural gas sales up by 11% on H1 2007

    NATURAL GAS SALES UP BY 11% ON H1 2007 • Consumption of power generators almost recovered despite strong hydro in Q1 • Lower distribution and industrial volumes in Q2 due to seasonality effect, however offsetted by electrical and trading volumes Natural gas sales (M m3) Q2 437 2,466 Q1 826 297 491 1

  17. Slide 17: Proforma EBIT up by 24% YoY

    PROFORMA EBIT UP BY 24% YOY • Stable Q2 EBIT yoy despite unbundling effect due to higher volumes in electrical and trading that compensated usual seasonality of distribution activity during Q2 • Proforma adjusted H1 EBIT up 24% driven by additional 242 Mm3 sold EBIT (M€) 24%1 128 137 Q2 109 100 Prof

  18. Slide 18: Financial Overview

    FINANCIAL OVERVIEW © galp energia

  19. Slide 19: Adjusted EPS increased by 71% to €0.34

    ADJUSTED EPS INCREASED BY 71% TO €0.34 IFRS Adjusted H106 H107 % Ch. € Million H106 H107 % Ch. 6,130 5,894 (3.9%) Sales 6,054 5,890 (3.0%) 615 627 2.0% EBITDA 404 481 19.2% 475 498 4.8% EBIT 264 360 36.4% 19 31 59.4% Income from Associates 19 31 59.4% 354 401 13.4% Net Income 167 285 71.0% 0.43 0.48

  20. Slide 20: Controlled cost structure

    CONTROLLED COST STRUCTURE • COGS down by 6% mainly due to lower crude and oil products prices • Proforma supply and services increased 1%, despite stronger activity in E&P • Proforma personnel costs decreased by 4% mainly due to corporate restructuring and lower post-employment benefits costs Operat

  21. Slide 21: E&P activity responsible for 50% of total capex

    E&P ACTIVITY RESPONSIBLE FOR 50% OF TOTAL CAPEX • Development of Block 14 and exploration activities in Block 32 and Brazil • Investment in refineries covering energy efficiency and environmental licensing • Additional 370 kms of ng distribution network built and 13 thousand clients converted Capita

  22. Slide 22: Net debt impacted by dividend payment of 252 M€

    NET DEBT IMPACTED BY DIVIDEND PAYMENT OF 252 M€ Balance Sheet Items (M€) Change vs Change vs Dec. 2006 Mar. 2007 Jun. 2007 Dec. Mar. Fixed Assets 2,413 2,445 2,459 46 14 Strategic Stock 453 443 477 24 34 Other assets (liabilities) (148) (192) (174) (26) 18 Working Capital 205 194 342 137 148 Net Deb

  23. Slide 23: Final Remarks

    FINAL REMARKS © galp energia

  24. Slide 24: Q1 Main Events

    Q1 MAIN EVENTS E&P • New oil discoveries in Block 32 and Block 14 • Confirmation of Block BM-S-11 major discovery (Tupi) • Agreement with the Portuguese State for oil exploration and production rights in Alentejo’s costs • Approval of conversion project for both Sines and Oporto R&M refineries • Def

  25. Slide 25: Q2 Main Events

    Q2 MAIN EVENTS • Start of appraisal well in Tupi Sul, 80 Km distant from Tupi E&P • 2 commercial discoveries in Block 32: Louro-1 and Cominhos-1 • Additions to portfolio: 4 blocks in Portugal, 5 blocks in Timor and 1 block in Mozambique R&M • Licensing entities already chosen for conversion project

  26. Slide 26: Short Term Outlook

    SHORT TERM OUTLOOK E&P • 7 wells to be executed in 2nd half of 2007 in blocks operated by Galp in onshore Brazil • Conclusion of Tupi Sul appraisal well expected for the end of Q3 • Definition with Petrobras of business plan for vegetable oil JV R&M • Negotiation of LSTK contract for the conversion

  27. Slide 27: Galp Energia positioned for growth

    GALP ENERGIA POSITIONED FOR GROWTH Adjusted EBITDA Proforma H1 06 Adjusted EBITDA H1 07 R&M 62% R&M 57% G&P G&P 26% 30% E&P E&P 8% 17% 354 M€ +36% 481 M€ Towards a more balanced portfolio Adjusted EBITDA proforma H1 2006: G&P adjusted by transportation, storage and regaseification activities sold to

  28. Slide 28: Galp Energia organic growth drivers

    GALP ENERGIA ORGANIC GROWTH DRIVERS Conversion Project 9 Oporto Cogeneration Facility 9 Oporto Cogeneration Facility 9 Wind Farms 9 Wind Farms 9 Strategic CCGT 2 9 CCGT 2 9 plan CCGT 1 9 CCGT 1 9 CCGT 1 9 under 9 9 9 9 Sines Sines Sines Sines Cogeneration Facility Cogeneration Facility Cogeneration

  29. Slide 29: 1st Investor Day - Save the date

    1st Investor Day Lisbon, 22 October 2007 Save the date…

  30. Slide 30: Investor Relations

    Investor Relations Tiago Villas-Boas Tel: +351 21 724 08 66 Fax: +351 21 724 29 65 E-mail: investor.relations@galpenergia.com Website: www.galpenergia.com

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