Novatek · RUS:NVTK
Novatek — Renaissance Capital – O&G Week 2007
20 slides from Novatek's conference presentation, Oct 22, 2007
Slide 1: Renaissance Capital – O&G Week: A Decade of Delivering Clean Energy
Renaissance Capital – O&G Week “A Decade of Delivering Clean Energy” Mark Gyetvay, Chief Financial Officer and Member of the Board of Directors Hotel National, Moscow, Russian Federation 22 October, 2007
Slide 2: Disclaimer
Disclaimer FORWARD–LOOKING STATEMENTS Matters discussed in this presentation may constitute forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which
Slide 3: Four pillars supporting growth & value creation
Four pillars supporting growth & value creation SEC P1 Reserves movements1 mm boe Ten years of natural gas production1 World class efficiency Pricing update to achieve export netback parity 150 bcm Current netback parity price ~ $180.00 297 4,664 651 bcm 3 yr. Avg. Reserve Replacement Cost 65.0 4,57
Slide 4: High Quality Long Life Reserves
High Quality Long Life Reserves 4
Slide 5: SEC P1 Reserves movements
SEC P1 Reserves movements1 mm boe 651 bcm 297 4,664 4,573 45 140 (16) (190) 252 407 381 4,178 (206) 4,149 3,931 350 380 511 78.5% 362 4,192 4,257 3,769 3,828 3,569 Proved Undeveloped Proved Developed 2006 2 2002 2003 2004 2005 Production Additions/ 2006 Natural gas, bcm 2006 Revisions 2006 • Increas
Slide 6: Resources for sustained long-term growth
Resources for sustained long-term growth 2006 Reserves, MM boe 2006 Reserve life Reserves/production (years) P2 Reserve Oil/ category Gas liquids2 Total P1 Proved (P1) 23 22 23 PD Proved + Probable (P2) 35 43 36 809 407 210 3,342 4,257 6,639 ABC1 30 38 30 As of December 31, 2006, NOVATEK’s proved de
Slide 7: Global oil and gas reserves - 2006
Global oil and gas reserves - 2006 MM boe Yrs. 56 000 112,000 45 Novatek ranks #9 in 40 48 000 natural gas reserves 35 40 000 30 32 000 25 24 000 20 15 16 000 10 8 000 5 1 2 3 6 4 5 7 8 9 - 0 Petroleos Mex Rosneft Tatneft Canadian Nat Petrobas Statoil PetroChina Novatek Conoco Exxon Mobil Total Teng
Slide 8: Production growth
Production growth =— NOVATEK ,
Slide 9: Natural gas production overview
Natural gas production overview bcm Reconfirmed and extended 65.0 65 production guidance per 60 Strategy Presentation 55 50 Revised production 45.0 45 forecast for 2007 due to 40 abnormally warm winter 35 28.7 28.7 30 25.2 25 19.8 20.9 20 13.9 15 6.9 10 2.0 3.0 5 0.1 0 19982 1999 2 20002 2001 2 2002
Slide 10: Increasing natural gas production
Increasing natural gas production Monthly Gas Production, mmcm/day Largely due to decreases in Cenomanian gas minimizing impact on 100 liquids production 90 80 Avg. 70 60 50 Decrease due to field development 40 work at TSNG 30 Seasonality effect 20 10 Seasonality effect 0 Jan Jun Jan Jun Jun Jan Jun
Slide 11: Low cost producer
Low cost producer =— NOVATEK a
Slide 12: World class efficiency
World class efficiency 3 yr. Avg. Reserve Replacement Cost Lifting Costs (2006) 1 (2004-2006) Lukoil 22.99 Anadarko 23.22 Rosneft 13.36 Chesapeake 15.35 Pioneer 12.92 Apache 10.92 Devon 12.57 Anadarko 9.79 Apache 11.81 Devon 9.31 BG 11.01 XTO 9.28 EnCana 10.17 EnCana 7.51 XTO 8.98 Chesapeake 6.91 Lu
Slide 13: Leveraged Full Cycle Ratio
Efficiency indicators 3 year average 2004 - 2006 Efficient use of capital & cost discipline 600% 600% NVTK (Avg. Russian & Caspian E&P’s) CHK 500% 500% Leveraged Full Cycle Ratio1 XTO 400% (Avg. all E&P’s) 400% (Avg. Super E&P’s) XTO RRR, % 300% 300% APC ECA PXD APA ECA 200% 200% DVN NVTK DVN CHK AP
Slide 14: Worldwide performance metrics
Worldwide performance metrics NOVATEK’s 2006 F&D cost was $0.57/boe compared $/boe to the worldwide average NOVATEK’s 3 yr avg. (2004- of ~ $14/boe $16 2006) RR cost was $0.55/ boe compared to the worldwide $14 average of ~ $10/boe $12 NOVATEK’s 2004 proved $10 acquisition cost was $0.67/ boe compar
Slide 15: Liberalized pricing environment
Liberalized pricing environment 15
Slide 16: Pricing update to achieve export netback parity
Pricing update to achieve export netback parity 150 Current netback parity price ~ $180.00 125 NOVATEK’s realized End-customer price $125,00 1 for 2Q 2007 $10,20 100 $18,30 $24,20 $102,20 $28,60 $91,30 $31,80 $31,80 75 $80,80 $58.50 $30,40 $71,50 $63,30 $63,30 50 $50,60 $50,60 28% 28% 25 15% 25% 26%
Slide 17: Current regulated price and net-back parity price
Current regulated price and net-back parity price Current Current net-back parity regulated Zone price $/mcm price $/mcm I 100.53 30.55 II 120.82 36.75 III 142.31 43.29 IV 160.12 48.71 IVa 154.39 46.98 Moscow V 163.69 49.80 VI 168.43 51.22 VII 170.12 51.76 VIII 178.16 54.20 IX 184.00 55.96 X 190.39
Slide 18: What if scenarios...gas price sensitivities?
What if scenarios...gas price sensitivities? 1. NVTK 2006 EBITDA1 – Price $1.30 / mcf 2. Pro-forma NVTK EBITDA -Price $3.54 / mcf 8 8 6 AVG 6 AVG $ / Mcf $ / Mcf 4 4 NVTK Peer 2 2 Group2 NVTK 0 0 - 5 10 15 20 25 - 2 4 6 8 10 12 EV/EBITDA EV/EBITDA • Planned gas liberalization together with NOVATEK’s
Slide 19: Value formula
Value formula 23 year R/P life 651 bcm P1 Gas reserves 78.5% Proved Developed Low-risk Net cash position 1+ tcm of natural gas Efficient Strong liquidity ratios Assets 180+ mmt of liquids Substantially de-levered Approx. 8 billion boe He l tia Ba alth n sta oked la y b Sh nce Su -bo rce ee t un sou
Slide 20: Questions and Answers
Questons and Answers =— NOVATEK 2