Galp Energia, Sgps S.a. Class B · EURONEXT:GALP
Galp Energia, Sgps S.a. Class B — Investor Day (February 2018)
48 slides from Galp Energia, Sgps S.a. Class B's investor day presentation, Feb 20, 2018
Slide 1: Capital Markets Day | February 20, 2018
1 | Capital Markets Day | February 20, 2018
Slide 2: Cautionary statement
Cautionary statement By attending or reading this presentation, you acknowledge and agree to not be acted or relied on by persons who are not Relevant Persons.This beyond its control. No assurance, however, can be given that such be bound by the following limitations and restrictions. This presentat
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Slide 4: Key takeaways
Key takeaways Solid financial Developing Working on the Commitment position entering a resilient next growth to shareholder into a new and competitive cycle (2020+) value creation cash cycle portfolio 4 | Capital Markets Day | February 20, 2018
Slide 5: 2017 commitments delivered
2017 commitments delivered WI production Record production (>100 kboepd) c.93 kboepd Project Coral South FLNG FID execution Downstream oil and gas Strong downstream performance +4% volumes Ebitda Positive Group post-dividend FCF c.1.9 €bn Financial Maintaining solid financial position Performance Ca
Slide 6: Oil & Gas to maintain a key role while renewables growing
Oil & Gas to maintain a key role while renewables growing Total primary energy demand mix in 2040 by scenario (bn toe) Energy demand expected to grow under 19.9 19.3 any scenario 18.2 17.8 17.6 15.1 13.8 14.1 Galp developed four scenarios internally IEA Galp IEA Galp Galp IEA Galp IEA 2016E Black CP
Slide 7: A clear strategy
A clear strategy Promote transition to lower carbon businesses Optimise and Offer innovative expand presence and differentiating in the downstream solutions market Grow Technology a profitable Innovation and resilient Digitalisation E&P portfolio Execute Extract Explore 7 | Capital Markets Day | Feb
Slide 8: Top quartile upstream portfolio
Top quartile upstream portfolio Portfolio breakeven ($/bbl) 1ST QUARTILE 2ND QUARTILE 3RD QUARTILE 4TH QUARTILE Exposure to world-class assets c.25 $/bbl Maintain portfolio resilience and competitiveness $45/bbl $55/bbl $60/bbl Source: Rystad, January 2018 (benchmark includes IOC, Majors and Integra
Slide 9: Brazilian pre-salt: Cornerstone of future growth
Brazilian pre-salt: Cornerstone of future growth Focus on BM-S-11 De-risking Sizeable Fostering FPSO execution existing resources new and development high quality with low cost opportunities enhancement portfolio base 9 | Capital Markets Day | February 20, 2018
Slide 10: Mozambique: Developing a world-class LNG project
Mozambique: Developing a world-class LNG project Global LNG supply and demand (mtpa) Oversupplied Project sanctioning needed to LNG market meet LNG demand Time to market and scalability advantage 600 Coral South FLNG under development 400 Preparing Mamba LNG 1st phase 200 0 2016 2020E 2025E 2030E Op
Slide 11: Grow a competitive and resilient upstream portfolio
Grow a competitive and resilient upstream portfolio Working interest production (kboepd) Execute and extract focus / Accelerate de-risking phase 25 - 30 Gas weight (%) c.150 kboepd Balance exposure to gas Selectively feed the upstream funnel 2017 2020E 2020+ Sanctioned Pre-FID Risked Exploration 11
Slide 12: Adapting Refining & Marketing to market changes
Adapting Refining & Marketing to market changes Refining Marketing Deliver efficiency and enhanced Reinforce market share conversion initiatives in Iberia Prepare for IMO global cap Improve convenience and customer experience Explore petrochemicals integration Develop African business clusters 12 |
Slide 13: Developing a sustainable Gas & Power business
Developing a sustainable Gas & Power business NG & LNG portfolio Marketing offer Adapt supply basket to Increase market share market trends in Iberia Expand trading activities New business segments New market opportunities / Energy efficiency outlets solutions provider 13 | Capital Markets Day | Feb
Slide 14: Building portfolio optionality
Building portfolio optionality Low carbon solutions New business models Innovation & digitalisation Develop a portfolio of renewable Enhance client centricity Promote digital mindset energy Focus on innovative technologies Develop mobility solutions Foster innovation agenda 14 | Capital Markets Day
Slide 15: Growing sustainably
Growing sustainably Eco-efficient and Climate integrated into safe operations strategy Promote safety above benchmark, Applying internal carbon price and 50% reduction target in 20181 ($40/tCO2e) sensitivity Leading environmental performance Commitment to Zero Routine and 20% cut in refining CO2 int
Slide 16: Turning into a sustainable FCF generator
Turning into a sustainable FCF generator Financial outlook FCF growth from a highly competitive and resilient portfolio Ability to fund further profitable growth ≈€1.6 bn >€1.0 bn ≈€0.6 bn 2017 2020E 2025+ Cash c.25 breakeven $/bbl Pre-dividend FCF CFFO 16 | Capital Markets Day | February 20, 2018
Slide 17: Disciplined capital allocation
Disciplined capital allocation Dividends Prioritizing reinvestment in value accretive opportunities Oil & Gas +10% businesses €0.55/sh1 Oil & Gas to remain core and starting to develop low carbon Dividend now considered at €0.55/sh Potential to further increase dividends, Low carbon and new while ma
Slide 18: Positioned to deliver unique growth and value
Positioned to deliver unique growth and value >1.0 €bn c.25 $/bbl 15% by 2020 2020+ target Organic FCF Group cash ROACE breakeven 2018-2020 milestones 2020+ goals Value proposition Execute/ From current portfolio Deliver Next growth cycle Selective Capex allocation Extract Start to Diversify capital
Slide 19: Financial Outlook
Slide 20: Beating our 2017 guidance
Beating our 2017 guidance Guidance Actual E&P €913 m @CMD17 +85% YoY Higher production and oil price Ebitda €1.5 - €1.6 bn €1.9 bn R&M €785 m +36% YoY Capex €1.0 - €1.2 bn €1.0 bn Supportive refining margin and marketing Net debt/ <2.0x 1.0x G&P €141 m Ebitda (55%) YoY GGND deconsolidation and fewer
Slide 21: Positive post-dividend cash flow during 2017
Positive post-dividend cash flow during 2017 2017 Cash flow (€m) 72 449 231 2,078 2,078 754 1,326 423 572 149 Ebit (IFRS) + Working Capital Net interests Pre-expansion Pre-expansion FCF Expansion FCF Dividend Post-dividend FCF DD&A + Associates + Taxes net capex capex 1 payment 1 Includes c.€150 m p
Slide 22: Organic growth to support CFFO
Organic growth to support CFFO CFFO (€m) Group Ebitda expected 2,000 at c.€1.8 – €1.9 bn in 2018 Upstream CFFO with CAGR 2017-20 of c.30% Downstream CFFO of €0.8 - €0.9 bn 0 during the period 2017 2018E 2020E Brent ($/bbl) 54 60 65 Benchmark ref. margin ($/bbl) 4.2 3.5 4.3 Group CFFO CAGR 2017-20 ab
Slide 23: Capex to average c.€1 bn p.a.
Capex to average c.€1 bn p.a. Annual average net capex (€m) Upstream 2018-20 capex breakdown 1,500 750 0 Last 3 years 2018-20E Upstream Downstream Lower carbon Brazil Mozambique Angola Exploration & Appraisal 2018 capex guidance of c.€1.0 – €1.1 bn 85% of E&P capex allocated to development activitie
Slide 24: Cash generation allowing for optionality
Cash generation allowing for optionality Cash sources and uses (€m) Post-dividend FCF2 (€m) 5,000 500 Dividend1 CFFO – net interests 0 – minorities Capex 0 -500 Sources 2018-20E Uses 2018-20E 2017 2018E 2019E 2020E Financial flexibility to support further portfolio expansion and shareholder distribu
Slide 25: Key takeaways
Key takeaways Superior growth Disciplined capital Net debt to Ebitda Organic FCF >€1 bn from competitive allocation <2x by 2020 portfolio 25 | Capital Markets Day | February 20, 2018
Slide 26: Capital Markets Day | February 20, 2018
26 | Capital Markets Day | February 20, 2018
Slide 27: Delivering on commitments and strengthening portfolio
Delivering on commitments and strengthening portfolio 2017 WI production of 93 kboepd, up 38% YoY Execute Focus on delivery FID on Coral South project Unlock more Enhancing Lula and Iracema development Extract value from current portfolio Pursue D&C and subsea costs optimisation Screening new opport
Slide 28: Robust base of high quality resources
Robust base of high quality resources 2P Reserves (mmboe) 2C Resources (mmboe) +2% 1,352 1,320 +11% 748 673 2016 Production Revision/Additions 2017 2016 Revision/Additions Revision/ Additions 2017 Brazil Angola Mozambique RRR of 198%1 R/P of 22 years2 Source: DeGolyer and McNaughton report as of 31.
Slide 29: Unique growth from identified projects
Unique growth from identified projects Working interest production (kboepd) Lula North (2018) Berbigão/Sururu (2018/19) 2018 - 2020 CAGR ≈ 8% Lula Ext. South (2018) Kaombo South (2019) Kaombo North (2018) Atapu 1 (2019) 15-20% ≈150 Sépia East (2021) Carcará Coral South (2022) Mamba 1st phase 2020+ 9
Slide 30: Execution of Lula and Iracema on track…
Execution of Lula and Iracema on track… Start-up of first replicant unit Current recovery factor of 31% 7 units producing, with 6 Expected avg. plateau period at plateau of 4 years 2 additional FPSOs to start-up in 2018 Benefiting from learning curve c.80% of 1st phase capex realised Leveraging stro
Slide 31: … with increased focus on enhancing extraction
… with increased focus on enhancing extraction Lula and Iracema recovery factor evolution Improved oil recovery 60% Infill drilling activities 50% Processing specifications Expected recovery factor Reservoir management 40% Current 31% 30% Enhanced oil recovery WAG 20% Subsea boosting and separation
Slide 32: The next pre-salt growth project
The next pre-salt growth project Greater Iara FPSOs under construction with production to start at Berbigão Ongoing drilling campaign and optimising PoD for three different accumulations EWT and further appraisal in Sururu to support future development activities Unitisation pre-agreements establish
Slide 33: Carcará: top tier project driving 2020+ growth
Carcará: top tier project driving 2020+ growth Deepwater development projects competitiveness 45 Accessing Carcará North with a 20% interest and 40 increasing BM-S-8 stake to 17% 35 30 Technical Costs At least 2 bn bbl of high quality oil expected to be 25 recovered with start-up by 2023/24 20 15 Ca
Slide 34: Further pre-salt contribution from identified projects
Further pre-salt contribution from identified projects BM-S-24 | Sépia East and Júpiter Unitisation process between Sépia and Sépia East expected to be concluded in 2018 Production from the unitised area to start in 2021, with FPSO awarded Maturing large scale Júpiter discovery development concept a
Slide 35: Mozambique: developing a world-class gas project
Mozambique: developing a world-class gas project Coral South Mamba onshore FLNG with 3.4 mtpa capacity, starting the Enhancing the development concept developments of Rovuma’s discoveries towards a robust and competitive solution Focus on execution to ensure first gas by 2022 Strong partnership leve
Slide 36: Optimising Angola projects
Optimising Angola projects Block 32 and block 14/14k Production from block 32 to start in 2018, offsetting decline from block 14 mature fields Drilling campaign in Kaombo proceeding according to plan Optimising development in block 14 36 | Capital Markets Day | February 20, 2018
Slide 37: Screening further opportunities
Screening further opportunities Regional focused exploration strategy Leveraging presence in Brazilian pre-salt top tier acreage North New ventures to include Atlantic both selected DRO and Margin exploration areas Developing competitive South advantages and synergies Atlantic with current portfolio
Slide 38: 2018: Key milestones
2018: Key milestones Two new replicants onstream in Lula and Kaombo start-up Maintain top production operational efficiency of FPSOs Execute Focus on delivery Lula’s first infill well to start production Coral execution Mamba development concept definition Unlock more Optimise Carcará 1st phase deve
Slide 39: Capital Markets Day | February 20, 2018
39 | Capital Markets Day | February 20, 2018
Slide 40: Positioned to deliver unique growth and value
Positioned to deliver unique growth and value >1.0 €bn c.25 $/bbl 15% by 2020 2020+ target Organic FCF Group cash ROACE breakeven 2018-2020 milestones 2020+ goals Value proposition Execute/ From current portfolio Deliver Next growth cycle Selective Capex allocation Extract Start to Diversify capital
Slide 41: Appendix
Slide 42: Sensitivity to macro environment volatility
Sensitivity to macro environment volatility Galp assumptions 2018E 2019E 2020E Brent price ($/bbl) 60 60 65 Benchmark refining margin1 3.5 3.2 4.3 EUR:USD 1.20 1.20 1.20 Ebitda FCF Sensitivities Change 2018E 2020E 2018E 2020E Brent price $5.0/bbl €140 m €200 m €100 m €80 m Benchmark refining margin1
Slide 43: Key indicators on Galp’s debt
Key indicators on Galp’s debt Debt indicators Debt reimbursement (€m) 2016 2017 900 Gross debt €2.9 bn €3.1 bn 600 Cash and equivalents €1.0 bn €1.2 bn Net Debt €1.9 bn €1.9 bn 300 Net Debt to Ebitda 1.3x 1.0x Available credit lines €1.2 bn €1.3 bn 0 2017 2018 2019 2020 2021 2022 2023+ % Debt @ fixe
Slide 44: Galp’s reserves and resources
Galp’s reserves and resources Reserves and resources (mmboe) Reserves 2016 2017 % Chg. 1P 274 383 40% 2P 673 748 11% 3P 927 965 4% Contingent resources 2016 2017 % Chg. 1C 300 296 (1%) 2C 1,320 1,352 2% 3C 2,993 3,297 10% Prospective resources 2016 2017 % Chg. Unrisked 2,658 3,835 44% Risked 383 566
Slide 45: Galp’s shareholding structure
Galp’s shareholding structure Institutional investors account for 83% of Galp’s Free Float, o.w.: • 51% Europe • 44% North America 33.34% • 5% Rest of the world 59.18% Free Float 7.48% 45 | Capital Markets Day | February 20, 2018
Slide 46: A committed and experienced team
A committed and experienced team Chief Executive Officer Carlos Gomes da Silva Over 22 years of experience in Oil & Gas and a Galp Board member since 2007. Former Board executive for more than 12 years in the energy and beverage industries. Chief Financial COO Exploration COO Supply, COO Iberian COO
Slide 47: Acronyms
Acronyms $ (or USD) United States Dollar Chg. Change IMO International Maritime Organization % Percentage CMD17 Capital Markets Day 2017 Kboepd Thousand barrels of oil equivalent per day & And CO2 Carbon dioxide LNG Liquefied Natural Gas @ At COO Chief Operating Officer m Million € (or EUR) Euro CPS
Slide 48: Capital Markets Day | February 20, 2018
48 | Capital Markets Day | February 20, 2018