Novatek · RUS:NVTK
Novatek — Troika Dialog/SBERBANK Russia: The Inside Track Investor Conference 2012
34 slides from Novatek's conference presentation, Sep 10, 2012
Slide 1: Russia’s Natural Gas Frontiers: Harnessing the Energy of the Far North
Russia’s Natural Gas Frontiers: “Harnessing the Energy of the Far North” Mark Gyetvay, Chief Financial Officer & Member of the Board Troika Dialog/SBERBANK – “Russia: The Inside Track” Investor Conference London, UK 10 - 11 September 2012
Slide 2: Disclaimer
Disclaimer This presentation does not constitute or form part of, and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity in
Slide 3: Value Formula
Value Formula 25 year R/P life (P1), 41 year R/P life (P1+P2) 1,321 bcm P1 Gas reserves ~50% Total Proved Developed Reserves Low-risk Efficient Natural gas will remain Assets ~5.4 tcm of natural gas2 the fuel of choice in ~717 mmt of liquids2 the 21st century ~41.6 billion boe2 VALUE Domestic gas pr
Slide 4: Leading Industry Reserve Efficiency
Leading Industry Reserve Efficiency 3-YR avg. reserve replacement rate, % 3-YR avg. F&D costs per boe NOVATEK 597% Lukoil 69.6 Chesapeake 458% Nexen 34.9 SWE 416% Apache 29.9 EOG 277% Anadarko 15.2 BG Group 217% Pioneer 14.3 Rosneft 217% BG Group 14.3 Devon 216% EOG 14.1 Pioneer 197% Chesapeake 13.3
Slide 5: Reserve to Production Life
Reserve Growth, mm boe Proved Reserve Changes (SEC) Total reserves by category 15,409 2010 Termokarstovoye field 13,386 41 years 2009 South-Tambeyskoye field (51%) 10,589 Reserve to Production Life 2010 SeverEnergia 2010 Sibneftegas 2011 South-Tambeyskoye field (29%) 7,358 7,441 7,562 7,498 6,766 Yu
Slide 6: Production – All Fields
Production – All Fields1 Natural gas production, bcm Gas condensate and crude oil production, mmt 2015F 2020F 2015F 2020F NOVATEK plans to more than double gas production and triple liquids production by 2020 Note 1: NOVATEK’s net interest in all fields 6
Slide 7: Yurkharovskoye field production growth
Yurkharovskoye field production growth Yurkharovskoye field infrastructure Field’s natural gas production, bcm 31.1% 35 32.0 30 24.4 25 20 17.7 17.0 15 11.5 9.6 10 5 0 2007 2008 2009 2010 2011 1H 2012 Field’s gas condensate production, mt gas pipeline gas preparation housing facilities unit gas and
Slide 8: Yurkharovskoye field drilling program
Yurkharovskoye field drilling program New Yurkharovskoye drilling program Old Yurkharovskoye drilling program - Horizontal wells with long perforated liners - Directional wells with short perforated liners - Big diameter wells - Average diameter wells - Record well flow, low decline rates - Average
Slide 9: Yamal & Gydan Peninsula Resources
Yamal & Gydan Peninsula Resources Russian Reserve Classification ABC1+C2 – Natural gas, bcm North-Obskiy Rusanovskoye Malyginskoye Leningradskoye Tasiyskoye Seyadorskoye North Tambeyskiy Russian Reserve/Resource Appraisal of New Licenses W. Tambeyskoye East-Tambeyskiy As at 31 December 2011 S. Tambe
Slide 10: Utrenneye & Geofizicheskoye Fields
Utrenneye & Geofizicheskoye Fields1 Gas production, bcm Gas condensate production, mmt F F Capital expenditures2, RR billion Preliminary Development Plans3 ♦ Flexible development options, pipeline (UGSS) or LNG ♦ Gas/gas condensate wells to be drilled in 2015-2020 – 150 ♦ Utrenneye – 104 wells ♦ Geo
Slide 11: Yamal LNG
Yamal LNG 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Concept, surveys, pre-FEED FEED, State expertise review, construction permit Final Investment Decision (FID) Early detailed engineering, EPC LNG plant startup by trains Adopt Yamal Field’s Development Program International partner selection
Slide 12: Target FID in 4Q 2012
Target FID in 4Q 2012 2011 Results 2012 Goals Exploration & Development Exploration & Development 3D seismic - 250 square km (Northern dome) Drilling and testing of 3 exploration wells Subsurface and hydrodynamic modeling Subsurface modeling Update reserves appraisal Reserves appraisal (
Slide 13: Yamal LNG Production Facility
Yamal LNG Production Facility Integrated facility at Sabetta Gas treatment and liquefaction facility • Onshore LNG plant: three production trains of 5.0 mmt per annum each • 1 mmt per annum stable gas condensate production capacity • Single site – integrated utilities and infrastructure • LNG tank
Slide 14: Onshore LNG plant infrastructure
Onshore LNG plant infrastructure Technological preparation complex and liquefaction of natural gas Modular design and construction of LNG plant Construction of onshore facilities in permafrost using pile foundations Three LNG production trains Warehouses Gas turbine power station LNG tanks Gas
Slide 15: Port of Sabetta Construction Plan
Port of Sabetta Construction Plan A key strategic facility for receiving goods and exporting products Start of construction of the port facilities commencing July 2012 First stage: constructing piers for the acceptance of large LNG process modules Second stage: constructing berths for LNG and
Slide 16: Port of Sabetta Infrastructure Diagram
Port of Sabetta Infrastructure Diagram Seaway and approach channels Port facilities, berths and harbor Government facilities 6 3 Administrative Yamal 1 facilities peninsula Ice protection 3 construction 4 2 4 Port harbor Approach 5 channel 1 2 6 Seaway channel 1 5 2 Yamal LNG facilities 3 Administra
Slide 17: South-Tambeyskoye Field
South-Tambeyskoye Field Natural gas production1, bcm 3391 118Р Northern Dome 115Р 3392 8394 3393 4392 87Р 2391-2 86Р 4391 8392 6391 5392 83933394 8391 116Р 3221 82Р 5391 3222 84Р 3223 3224 93Р 4221 3225 119Р 83Р 3351 3352 3352-2 7351 4351 1351 3353 3354 1352 113Р 3355 4352 Central 3401 73Р 1401 3402
Slide 18: Field Development
Field Development Development parameters Optimize drilling and surface facilities Production of 25.2 bcm per annum (at plateau); Old New ~ 204 producing wells; No. of drilling rigs 8 5 Directional wells (avg. horizontal displacement - ~ 500m); No. of well pads 35 20 Field development sequenc
Slide 19: Yamal LNG Carrier Concept
Yamal LNG Carrier Concept Based on operational experience from ice class tankers at Lukoil’s Varandey project (Barents Sea) and Norilsk Nickel’s arctic operations Main concept - Double Acting Ship (DAS): • Bow – forward movement in open water and thin ice • Astern – reverse movement through thick ic
Slide 20: NOVATEK LNG Strategy Implementation
NOVATEK LNG Strategy Implementation Natural gas spot price1, $/mmbtu Summer transportation route to target markets, liquids & LNG All season transportation route to target markets, liquids & LNG Transportation routes to other markets 9.6 2 3 USA 2.8 13.4 11.0 10.5 13.0 Notes: 1. Based on average act
Slide 21: Russian Natural Gas – Supply & Demand
Russian Natural Gas – Supply & Demand Russian Natural Gas Supply, bcm 704 ~785 ~882 2011 2015F 2020F Russian Natural Gas Demand, bcm 704 ~785 ~882 21
Slide 22: Domestic Natural Gas Sales
Domestic Natural Gas Sales End-Customer Sales Breakdown 22
Slide 23: Market Presence
Market Presence (Forecast for Primary Regions) 23
Slide 24: NOVATEK’s Domestic Gas Deliveries, bcm
NOVATEK’s Domestic Gas Deliveries, bcm 2011 2015F 2020F 3% 12% ~53.7 ~72 ~90 40% 45% 24
Slide 25: Appendix: Financial and Operational Results
Appendix: Financial and Operational Results 25
Slide 26: NOVATEK’s Hydrocarbon Reserves
NOVATEK’s Hydrocarbon Reserves Historical natural gas reserve1 growth PRMS Independent Reserve SEC Appraisal1, 31.12.2011 Proved+ Proved Probable Probable bcm 1 321 1 585 523 2 108 Natural gas tcf 47 56 18 74 mmt 91 118 81 199 Liquids mmbbl 752 970 652 1 622 Total mmboe 9 393 11 337 4 072 15 409 2 N
Slide 27: World Class Reserve Metrics
World Class Reserve Metrics Reserve Replacement Costs Reserve Replacement Rate Reserve Life, (3-year average),$/boe (3-year average), % years 30 29 17.2 597% 16.6 16.6 25 25 567% 15.2 23 23 22 14.0 12.3 431% 14 13 13 13 13 13 243% 259% 242% 225% 222% 195% 194% 2.2 158% 162% 1.0 0.9 1.2 1.1 0.6 '04-'
Slide 28: Ramping Up Hydrocarbon Production
Ramping Up Hydrocarbon Production Natural Gas Sales Production, bcm Liquids Sales Production, mmt Total Hydrocarbon Production, mmboe CAGR 14% CAGR 10% CAGR 14% 380 52.8 4.1 Absolute increase 152.6% Absolute increase 95.2% Absolute increase 145.2% 3.6 274 37.2 3.0 237 32.4 2.6 220 30.4 2.4 203 28.6
Slide 29: Oil and Gas Results, RR/boe
Oil and Gas Results, RR/boe Oil &Gas Revenues Lifting Costs Oil &Gas Cash Flow1 CAGR 16% CAGR 21% 455.3 16.0 16.0 16.3 213.4 Absolute increase 179.7% 424.3 14.7 14.9 15.0 Absolute increase 280.4% 187.7 359.5 12.2 317.4 152.1 135.9 262.9 112.7 221.4 97.3 187.5 87.6 162.8 56.1 2004 2005 2006 2007 2008
Slide 30: 2011 Results – Another Record Year (RR million)
2011 Results – Another Record Year (RR million) 2011 2010 +/(-) +/(-)% Oil and gas sales 175 602 115 162 60 440 52.5% Total revenues 176 064 117 024 59 040 50.5% Operating expenses (97 665) (68 518) (29 147) 42.5% EBITDA1 148 349 57 506 90 843 158.0% EBITDA margin 84.3% 49.1% Normalized EBITDA2 85 4
Slide 31: Quarterly Results (RR million)
Quarterly Results (RR million) Q-o-Q Y-o-Y 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 +/- % +/- % Oil and gas sales 40,551 39,888 50,544 54,152 44,984 -16.9% 10.9% Total revenues 40,626 40,033 50,718 54,373 45,145 -17.0% 11.1% Operating expenses (22,474) (22,920) (28,980) (31,851) (26,780) -15.9% 19.2% EBITDA (1
Slide 32: Debt Composition and Financial Policies
Debt Composition and Financial Policies Debt Composition as at 30 June 2012 – Total Debt = RR 93.7 billion Currency Type USD Bonds 54% 63% 37% 46% RR Credit Facilities Established track record of adhering to creditor friendly financial policies Metric Policy Target 2008 2009 2010 20111 1H 20121 Debt
Slide 33: Total Debt Maturity Profile (RR million)
Total Debt Maturity Profile (RR million) 22,851 In July 2012, the Group repaid 20,185 21,188 19,592 bank overdrafts (RR 3,011 million 19,840 as of 30 June 2012) 9,851 In July and August 2012, the Group repaid two tranches of loan from ZAO UniCredit Bank 3,011 aggregating USD 40 million 1 July 20
Slide 34: Questions and Answers
Questions and Answers Contact details: NOVATEK’s Investor Relations Mark Gyetvay, Chief Financial Officer Alexander Palivoda, Head of IR Tel: +7 (495) 730-6013 Email: ir@novatek.ru Website: www.novatek.ru
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