Gazprom Neft · RUS:SIBN
Gazprom Neft — Sibneft — FY2001 Earnings Presentation
39 slides from Gazprom Neft's earnings presentation, Jun 25, 2002
Slide 1: 2001 Annual Results Presentation
2001 Annual Results Presentation Moscow, 25 June 2002
Slide 2: Part 1 – Overview
Part 1 – Overview Alexander Korsik Chief Operating Officer
Slide 3: Highlights from a year of growth
Highlights from a year of growth • Sibneft posts record net profits for 2001 of $1.305 billion, almost double the total for the previous year • Net profits of $63.15 per tonne of output make Sibneft the most profitable of Russia’s major oil companies • Sibneft becomes Russia’s fastest growing oil co
Slide 4: Foundations for sustainable growth
Foundations for sustainable growth • Sibneft production passes historic 500,000 barrel per day barrier • Output on target to grow by 29% in 2002 to 527,000 barrels per day (26.7 million tonnes) • Growth supported by robust 42% increase in upstream capital expenditure to $637 million in 2002 • Long-t
Slide 5: Outlook for 2002
Outlook for 2002 • Sibneft investment programme sheltered from oil price fluctuations by robust margins and conservative assumptions • Low production costs enable company to operate successfully in low oil price environment • Priority given to maximizing returns from existing asset base over the pur
Slide 6: 2001 in review – Key developments (a)
2001 in review – Key developments (a) • February – Sibneft signs Sibneft-Yugra joint venture agreement to develop Priobskoye and Palyanovskoye fields • May – Sibneft signs $60 million Pride Forasol horizontal drilling contract for Sugmut field • June – Sibneft unveils dividend policy, elects indepen
Slide 7: 2001 in review – Key developments (b)
2001 in review – Key developments (b) • October – Sibneft brings on stream new alkylation unit at Omsk refinery • November – Sibneft becomes first Russian company to secure credit rating which pierces sovereign ceiling • December – Sibneft acquires 36% stake in Moscow refinery opening up markets in
Slide 8: Part 2 – Financials
Part 2 – Financials Olga Pokrovskaya
Slide 9: Financial highlights
Financial highlights • Net income almost doubles to $1.305 billion • Net profits of $63.15 per tonne of output make Sibneft the most profitable of Russia’s major oil companies • Revenues rise by 49% to $3.576 billion • Reduction in direct production costs to $1.70 per barrel from $1.75 in 2000 • Deb
Slide 10: Profit margins strengthen
Profit margins strengthen 60% 48% 50% 42% 40% 37% 40% 31% EBITDA margin 28% 30% Pre-tax margin Net margin 20% 10% 0% 2000 2001
Slide 11: Income statement highlights
Income statement highlights ($’000) 2000 2001 Refined products, oil and gas sales 2,344,453 3,449,145 Total revenues 2,397,922 3,575,679 Costs and other deductions 1,670,505 2,170,442 EBITDA 1,027,417 1,719,153 DD&A 300,000 313,916 EBIT 727,417 1,405,237 Minority interest 61,549 (729) Other income a
Slide 12: Revenue analysis
Revenue analysis Export earnings accounted for 54% of total revenues Net crude and products sales ($’000) Exports Domestic Total (%) Crude 1,191,329 19,403 1,210,732 37% Product 547,885 1,487,174 2,035,059 63% Total 1,739,214 1,506,577 3,245,791 100%
Slide 13: Balance sheet highlights
Balance sheet highlights ($’000) 2000 2001 Cash and equivalents 27,086 51,649 Accounts receivable 448,695 765,794 Net oil and gas properties / PP&E 3,191,624 3,241,170 Total assets 4,572,569 5,712,796 Short-term debt 405,025 314,864 Long-term debt 187,528 608,333 Accounts payable and accrued liabili
Slide 14: Capitalisation
Capitalisation ($’000) 2000 2001 Short-term liabilities 405,025 314,864 Long-term liabilities 187,528 608,333 Shareholder capital 3,169,725 4,036,735 Net debt / shareholder capital 18 % 23% Weighted average interest rate at end of period 11.95 % 9.59% Weighted average interest rate for period 10.72
Slide 15: Financial ratios
Financial ratios (%) 2000 2001 Profitability ratios Return on assets 14.8 22.9 Return on equity 21.3 32.3
Slide 16: Cash flow highlights
Cash flow highlights ($’000) 2000 2001 Net profit / (loss) 674,845 1,305,274 Change in net accounts receivable (122,401) (329,758) Change in accounts payable 205,780 (88,366) Change in estimated income taxes (10,655) 101,363 Net cash from operating activities 920,469 1,311,288 Net cash used in inves
Slide 17: Net income ahead of peers
Net income ahead of peers US GAAP 2001 net income ($/tonne of output) 70 $59.76 $63.15 50 $31.74 30 10 TNK Yukos Sibneft
Slide 18: EBITDA ahead of peers
EBITDA ahead of peers US GAAP 2001 EBITDA ($/tonne of output) $83.17 85 $68.88 65 $49.95 45 25 5 TNK Yukos Sibneft
Slide 19: Sales ahead of peers
Sales ahead of peers US GAAP 2001 sales ($/tonne of output) 200 $168.93 $172.98 $136.16 150 100 50 TNK Yukos Sibneft
Slide 20: Financing growth
Financing growth • Sibneft’s financing strategy is to replace short-term high-cost finance with longer term, lower cost facilities • Sibneft in January 2002 placed $400 million Eurobond, the largest corporate bond issue in Russian history • Sibneft continues to push out the boundaries by securing fa
Slide 21: Part 3 – Operations
Part 3 – Operations Alexander Korsik Chief Operating Officer
Slide 22: Operational highlights (a)
Operational highlights (a) • Sibneft is Russia’s fastest growing oil company – Output growth in 2001 of 20% to 408,000 barrels per day (20.67 million tonnes) – Target growth in 2002 of 29% to 527,000 barrels per day (26.7 million tonnes) – Long-term target of 830,000 barrels per day (42 million tonn
Slide 23: Operational highlights (b)
Operational highlights (b) • Sibneft increases exports to an average of 35.1% of output in 2001 from 32.5% the previous year • Sibneft raises refinery throughput in April 2002 by 38% from same month the previous year to 342,000 barrels per day (1.42 million tonnes) after company begins processing at
Slide 24: Achieving long-term growth
Achieving long-term growth • Sibneft is committed to achieving output of 830,000 barrels per day (42 million tonnes) from existing asset base within three years – 140,000 barrels per day (7.2 million tonnes) from the Sugmut field – 80,000 barrels per day (4.1 million tonnes) from Priobskoye and Paly
Slide 25: Building a new company
Building a new company Integrated oil company Breaking through Restructuring Taking control Portfolio of legacy assets 1995 - 1997 1998 - 2000 2001 - 2002
Slide 26: Restructuring checklist
Restructuring checklist Business planning and monitoring Field development planning and reservoir management Production technology Outsourcing of services People
Slide 27: Production growth ahead of peers
90 110 130 150 170 % January February March April May June Lukoil 2000 July August Sept ember Oct ober November Surgut December January February March April Yukos May June 2001 July August Sept ember TNK Oct ober November December January Production growth ahead of peers February 2002 March Growth i
Slide 28: Productivity rising
Productivity rising 100 70% Average well 90 68% output (total) - 80 66% tonnes per day 70 64% 60 62% Average well 50 60% output (new 40 58% wells) - tonnes per day 30 56% 20 54% Water cut (%) 10 52% 0 50% 1998 1999 2000 2001 2002
Slide 29: Foundations for growth
Foundations for growth • Sophisticated corporate planning and management information systems • Technology gap of fifteen years closed in three years • Focus on core function of reservoir management • World class field development plans covering half of asset base already prepared • Horizontal wells
Slide 30: Costs under control
Costs under control Direct production costs ($ per barrel) Materials & $2.00 $1.75 $1.70 Suppliers $1.75 Utilities $1.50 Transport $1.25 $0.89 $1.00 Salaries $0.75 Workovers $0.50 $0.25 Other $0.00 1999 2000 2001
Slide 31: Potential to improve recovery
Potential to improve recovery Better field development planning has enabled Sibneft to raise recovery rates Field Recovery Recovery Proven Proven rate under rate under reserves reserves old plan (%) new plan under old under new (%) plan (million plan tonnes) (million tonnes) Sugmut 31.0 32.9 80.8 85
Slide 32: Tapping into the potential (a)
Tapping into the potential (a) Sibneft is targeting a recovery rate of 40% by 2020 50 Recovery Rate (%) 45 40 35 30 25 20 1965 1970 1975 1980 1985 1990 1995 2000 United States Russia
Slide 33: Tapping into the potential (b)
Tapping into the potential (b) • Reliable production forecasts through to 2006 based on hydrodynamic simulations • Sibneft aims to raise the recovery rate from 29.5% today to 40% by 2020 • Exploration in existing license areas leads to 10% increase in oil in place • Acquisitions and exploration in n
Slide 34: Tapping into the potential (c)
Tapping into the potential (c) Output (million tonnes per annum) 60 50 New New acquisitions acquisitions to to compensate compensate for for reserve depletion 40 30 33% recovery rate 40% recovery rate 20 Current 29% 10 recovery rate 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Acquisitio
Slide 35: Stable reserve base
Stable reserve base Reserve audits conducted by Miller and Lents (million barrels) Category 1 January 2002 1 January 2001 Proven 4,646 4,644 Probable 2,360 2,086 Possible 1,269 1,546 Total 8,275 8,276
Slide 36: Diversifying the downstream
Diversifying the downstream • Start of refining at the Moscow refinery offers additional outlet for rising production and strengthens downstream business • Throughput at Omsk refinery to rise to 290,000 barrels per day (14.75 million tonnes) by 2004 from 262,000 barrels per day (13.26 million tonnes
Slide 37: Opening new markets
Opening new markets • Sibneft expands retail network to include Tomsk, Krasnoyarsk, and Kemerovo regions in core region of Siberia • Acquisition of 36% stake in Moscow refinery opens markets in European Russia • First gasoline station in Moscow opened in spring 2002 with plans for rapid expansion in
Slide 38: Strategy checklist
Strategy checklist Focus on unlocking potential of existing upstream asset base Organic growth complemented by acquisitions to compensate for reserve depletion Upstream growth balanced by expansion of downstream businesses through acquisition Investment in people
Slide 39: Ingredients for success
Ingredients for success Management People Technology