Repsol Sa · BME:REP
Repsol Sa — Investor Presentation (February 2016)
55 slides from Repsol Sa's investor presentation, February 2016
Slide 1: 2016-2020 Value & Resilience
2016-2020 VALUE & RESILIENCE February, 2016 1
Slide 2: Disclaimer
ALL RIGHTS ARE RESERVED © REPSOL, S.A. 2016 Repsol, S.A. is the exclusive owner of this document. No part of this document may be reproduced (including photocopying), stored, duplicated, copied, distributed or introduced into a retrieval system of any nature or transmitted in any form or by any mean
Slide 3: Strategic Plan 2016-2020: Agenda
Strategic Plan 2016-2020: Agenda 2012-2016 Strategic Plan delivery Key strategic lines 2016-2020: Value & Resilience Financial outlook Summary Repsol 3Q 2015 Results 3
Slide 4: Strategic Plan 2016-2020: Agenda
Strategic Plan 2016-2020: Agenda 2012-2016 Strategic Plan delivery Key strategic lines 2016-2020: Value & Resilience Financial outlook Summary Repsol 3Q 2015 Results 4
Slide 5: 2012-2015 Milestones: Growth and Delivery
2012-2016 Strategic Plan delivery 2012-2015 Milestones 2012-2016 Strategic Plan: Growth and Delivery 2012 2013 2014 2015 LNG business YPF settlement Talisman YPF expropriation divestment and full monetization Acquisition Cartagena & Petronor Start-ups: Carabobo and Hybrid bonds New CEO appointment r
Slide 6: 2012-2016 Strategic Plan targets achieved
2012-2016 Strategic Plan delivery 2012-2016 Strategic Plan targets achieved // Targets // // Delivery // CAGR>7% • Upstream as growth engine >25%/y (1) High growth in Prod 2016 ~500 kboepd ~650 kboepd Upstream • Reserves Replacement RRR > 120% 190% (2011-2014) Maximize • Maximize profitability and c
Slide 7: Repsol today
2012-2016 Strategic Plan delivery Repsol today An integrated company operating across the entire value chain ~2.2 billion boe Integrated Delivery on proved reserves business model commitments ~650 kboepd // Talisman acquisition // Diversified and global production May 2015: closing portfolio • Trans
Slide 8: Strategic Plan 2016-2020: Agenda
Strategic Plan 2016-2020: Agenda 2012-2016 Strategic Plan delivery Key strategic lines 2016-2020: Value & Resilience Financial outlook Summary Repsol 3Q 2015 Results 8
Slide 9: Key strategic lines 2016-2020: Value & Resilience
Key strategic lines 2016-2020: Value & Resilience Key strategic lines 2016-2020 VALUE RESILIENCE Shift from growth to value Top tier resilience among delivery, prepared integrated companies for the next growth wave Self-financing strategy even in a Commitment to maintain stress scenario shareholder
Slide 10: Scenario assumptions
Key strategic lines 2016-2020: Value & Resilience Scenario assumptions Stress scenario 2016-2020 Repsol refining Brent price Henry Hub price margin indicator $50/bbl flat $3.5/Mbtu flat $6.4/bbl flat Base scenario 2016-2020 2016 2017 2018 2019 2020 Brent price ($/bbl) 65.0 75.0 85.0 90.0 91.8 Henry
Slide 11: Shift from growth to value
Key strategic lines 2016-2020: Value & Resilience Shift from growth to value // Upstream production evolution // kboepd 1,000 • Achieved critical mass in E&P business 800 x2 • Extensive portfolio of assets and 600 development projects 400 • Optionality to improve portfolio value by 200 divestments 0
Slide 12: Capex reduction as a key lever
Key strategic lines 2016-2020: Value & Resilience Capex reduction as a key lever // Group annual Capex (1) // $B 8 • Upstream assets in an advanced stage of investment 35% • Limited presence in capital-intensive new developments 6 38% • High share of unconventionals (price responsive Capex) • Invest
Slide 13: Enlarged portfolio allows divestments
Key strategic lines 2016-2020: Value & Resilience Enlarged portfolio allows divestments // Asset divestment plan of €3.1 B in 2016-2017 ✓ €1Talisman and €3.1 B in 2018-2020 // B in divestments commitment, after €B acquisition, fully achieved (1) 4 3 ✓ Finding natural owners of assets willing to pay
Slide 14: Synergies and Efficiency Program to reach €2.1 B/y in 2018
Key strategic lines 2016-2020: Value & Resilience Synergies and Efficiency Program to reach €2.1 B/y in 2018 Strict accountability on Efficiency Program delivery for the management team // 2018 Opex impact // // 2018 Capex impact // • Savings from combining the organizations Synergies • Benefits fro
Slide 15: Synergies from Talisman integration already being delivered
Key strategic lines 2016-2020: Value & Resilience Synergies from Talisman integration are already being delivered // Integration synergies // // Selected examples // $M/y • Workforce and contractors reduction from overlaps 400 • Removal of duplications in general services, helpdesk + $130 M/y suppor
Slide 16: Breakevens
Key strategic lines 2016-2020: Value & Resilience Breakevens // Group FCF breakeven (1) after dividends // // Upstream FCF breakeven (1) // $/bbl $/bbl 80 60 ~50(2) 60 45 (av. 2016-2020) 30 40 ~60 ~75 15 ~45 20 ~60 0 0 2016-2017 2018-2020 2016-2017 2018-2020 Resilience: $50/bbl free cash flow breake
Slide 17: FCF breakeven reduction capacity well positioned within industry
Key strategic lines 2016-2020: Value & Resilience Repsol’s FCF breakeven reduction capacity well positioned within industry // Company FCF breakeven in 2016 (after dividends)(1) // $/bbl 80 60 40 20 0 Repsol Majors(2) Integrated Pure E&P(4) companies(3) Downstream cash generation Exploration Rest of
Slide 18: Self-financed Strategic Plan
Key strategic lines 2016-2020: Value & Resilience Self-financed Strategic Plan // Cash movements 2016-2020 (accumulated) // €B (Stress scenario) (1) 35 Cash for dividend and debt 30 ~5 ~6 in base scenario (2) 25 ~€20 B 20 ~23 ~32 15 10 (4) 5 ~10 0 Operating cash Financial expenses Divestments Invest
Slide 19: Upstream
Upstream Downstream Corporation 19
Slide 20: Upstream strategy 2016-2020
Key strategic lines 2016-2020: Value & Resilience Upstream strategy 2016-2020 // Starting point // // Strategic positioning // (Repsol + Talisman) • Lower Capex intensity and Efficiency improved value • Broad geographic footprint Program with some subscale positions • More resilient with FCF Upstrea
Slide 21: 3 core regions in the portfolio
Key strategic lines 2016-2020: Value & Resilience 3 core regions in the portfolio North America: Growth Production 2016: ~180 kboepd Operatorship: ~79% Gas production (2016): 71% • Unconventional portfolio Latin America: FCF SouthEast Asia: FCF & Growth • Operatorship Production 2016: ~360 kboepd •
Slide 22: Extensive pipeline of organic opportunities
Key strategic lines 2016-2020: Value & Resilience An extensive pipeline of organic opportunities // Exploration // Contingent resources • Brazil: Campos-33, Albacora Leste, Sagitario • Russia: Karabashky Russia • Colombia: CPO9 & Niscota North America • Alaska: Colville High SANECO / Eagle Ford Marc
Slide 23: Portfolio management: Production
Key strategic lines 2016-2020: Value & Resilience Portfolio management: Production // 2020 Production ~700-750 kboepd // // Focus: 3 regions, 3 play types // Production 2016-2020 kboed 1,000 Non-operated Offshore deep Offshore shallow 9% 33% Portfolio 800 management 600 Unconventional 23% Onshore co
Slide 24: Portfolio management: Capex
Key strategic lines 2016-2020: Value & Resilience Portfolio management: Capex // Capex reduction 2016-2020 // // Capex prioritization driven (Average annual Capex) (1) by value and strategic fit // $B 7 • Development Capex reduction based on value 6 ~40% optimization: o Fulfill contractual minimum c
Slide 25: Portfolio management: Exploration
Key strategic lines 2016-2020: Value & Resilience Portfolio management: Exploration // Lower exploration intensity, // Unconventionals will complement more focused, lower risk // exploration for reserve replacement // $B/year (Exploration expense) (1) Mboe 3000 3,000 RRR (2) ~100% 2.0 2500 2,500 1.5
Slide 26: More than 80% of 2020 production from today's reserves
Key strategic lines 2016-2020: Value & Resilience More than 80% of 2020 production coming from today’s reserves // Production evolution // kboepd 800 600 400 200 0 2014 2015 2016 2020 From Reserves From Contingent resources From Prospective resources Production guaranteed with current reserves and r
Slide 27: E&P Cost Efficiency Program
Key strategic lines 2016-2020: Value & Resilience E&P Cost Efficiency Program Focused on structural efficiency gains and industry deflation capture // Levers // • Technical standardization Business units • Operational uptime increase (Opex & Operational Capex) • Procurement & logistics optimization
Slide 28: Selected examples of Upstream saving initiatives
Key strategic lines 2016-2020: Value & Resilience E&P Cost Efficiency Program Selected examples of Upstream saving initiatives // Initiative // // Description // // Status // // Yearly impact // Marcellus (US) well cost optimization Cost reduction program in well drilling and completion by contract
Slide 29: UK transformation plan already delivering results
Key strategic lines 2016-2020: Value & Resilience E&P Cost Efficiency Program UK transformation plan already delivering results Program implemented from 2014 delivering in 2015: // Complex network of operated production facilities // • After more than 10 years of decline, production to increase 15%
Slide 30: Upstream metrics improvement in 2016-2020
Key strategic lines 2016-2020: Value & Resilience Upstream metrics improvement in 2016-2020 Commitments // Capex (1) // // Opex & Capex savings // $B ~ 40% $B 1.2 6.7 0.6 Opex Capex 4.1 Efficiency 0.6 Capex 2014 2016-2020 2018 // Upstream FCF breakeven // // ROACE (2) increase // $/bbl ~5 p.p. Portf
Slide 31: Downstream
Upstream Downstream Corporation 31
Slide 32: Downstream to provide sustainable value
Key strategic lines 2016-2020: Value & Resilience Downstream to provide sustainable value Maximize • Taking advantage of the integration between refining and performance marketing businesses with focus on reliability • Discipline in capital allocation Capital discipline • Divestments of non-core ass
Slide 33: Downstream strategy: Maximizing value and cash generation
Key strategic lines 2016-2020: Value & Resilience 2016-2020 Downstream strategy: Maximizing value and cash generation leveraged on fully invested assets // Sustainable value from quality assets // // Investment discipline // Repsol in leading position among european peers European Integrated Margin
Slide 34: Repsol's refining margin indicator evolution
Key strategic lines 2016-2020: Value & Resilience Repsol’s refining margin indicator evolution Margins back to a mid cycle scenario Base Repsol Crack Index1 2005-2020 Repsol Refining margin index evolution ($/bbl) ($/bbl) 10 -28% 10 8.8 0.5 8 8 6.4 4.0 6 6.6 6 0.7 4 3.0 4 Avg. 3.6 4.3 2 2 2.7 4.3 2.
Slide 35: Fundamentals support sustained Repsol refining margins
Key strategic lines 2016-2020: Value & Resilience Fundamentals support sustained Repsol refining margins Lower Opex Lower oil and gas prices Growing refined Average demand growth of 1.2% for 2016-2020 on top of strong 2015 demand products demand Spain fuels demand growth at 4% in 2015 European
Slide 36: Downstream efficiency and margin improvement program
Key strategic lines 2016-2020: Value & Resilience Downstream efficiency and margin improvement program // Projects // // Levers // // EBIT increase by 2018 // • Energy cost reduction • Improved planning to increase crude supply flexibility Refining ~€250 M/y • Operations optimization including fixed
Slide 37: Selected examples: Downstream
Key strategic lines 2016-2020: Value & Resilience Selected examples: Downstream // Initiative // // Description // // Status // // Impact on EBIT // ✓ Under Minimize use of turbines, repair leaks, maximize Petronor steam reduction condensate return, optimize steam ratios and implementation €41 M/y p
Slide 38: Downstream metrics improvement in 2016-2020
Key strategic lines 2016-2020: Value & Resilience Downstream metrics improvement in 2016-2020 Commitments // Improvement in EBIT // // D&A // // Capex // €B €B/y Efficiency ~0.5 Run-rate 0.8 0.8 Program Capex 2018+ Avg. 2016-2020 Avg. 2016-2020 €B/y // FCF // // ROACE // Performance 1.7 improvement
Slide 39: Corporation
Upstream Downstream Corporation 39
Slide 40: Talisman corporate cost offset by synergies and efficiency programs
Key strategic lines 2016-2020: Value & Resilience Talisman adding ~ €0.4 B/year corporate cost that will be offset by synergies and efficiency programs // Corporate costs // €M/y 1,500 1,305 179 228 Synergies from integration 1,000 898 + 500 Corporate Efficiency Program 0 2015 Synergies (1) Efficien
Slide 41: Sustainability, a priority for the company
Key strategic lines 2016-2020: Value & Resilience Sustainability, a priority for the company // Carbon strategy – Facing the issues // // Safety, a non-negotiable value in Repsol // Lost Time Injuries Frequency 10 Carbon • Cost of CO2 applied to all 8 pricing investment decisions 6 ÷10 4 Energy • Ef
Slide 42: Gas Natural Fenosa strategic stake
Key strategic lines 2016-2020: Value & Resilience Gas Natural Fenosa strategic stake Strong profitability with long term strategic vision 30% of valuable stake in a leading gas & power company Stable dividend with growth potential Strong profitability performance (well above wacc and not linked to o
Slide 43: Strategic Plan 2016-2020: Agenda
Strategic Plan 2016-2020: Agenda 2012-2016 Strategic Plan delivery Key strategic lines 2016-2020: Value & Resilience Financial outlook Summary Repsol 3Q 2015 Results 43
Slide 44: Financial outlook
Financial outlook Financial Strategic Plan 2016-2020 Sound track record Resilient Plan with Conservative in managing adverse stronger business profile financial policy conditions Commitment to reduce debt Commitment to maintain investment grade rating Commitment to maintain shareholder compensation
Slide 45: Capital structure actions driven by conservative financial policy
Financial outlook Capital structure actions driven by conservative financial policy and investment-grade rating commitment // 2016-2017 // // 2018-2020 // (2 years accumulated) (3 years accumulated) Hybrid issuance (1) €3.0 B Scrip dividend (2) €1.4 B €2.2 B Synergies €0.3 B €1.0 B Divestments €3.1
Slide 46: Strategic Plan 2016-2020: Agenda
Strategic Plan 2016-2020: Agenda 2012-2016 Strategic Plan delivery Key strategic lines 2016-2020: Value & Resilience Financial outlook Summary Repsol 3Q 2015 Results 46
Slide 47: Summary: Strategy 2016-2020: Value and Resilience
Summary Strategy 2016-2020: Value and Resilience // EBITDA(1) // Synergies Capex and efficiency flexibility Base scenario Stress scenario €B €B €2.1 B/y 12 x2 12 Pre-tax cash savings Up to 40% x1.5 by 2018 (Opex & Capex) 9 11.5 9 2016-2020 Capex reduction in Upstream vs. 2014 6 6 7.9 €1.5 B €0.6 B 5
Slide 48: Repsol 2020: Leaner and more competitive
Summary Repsol 2020 • Fully-integrated business model • World-class explorer • Optimized Upstream portfolio focused on core areas and play types • Technical capabilities (unconventionals, operatorship...) • Tier 1 Downstream • Technology and know-how • Safety & sustainability • Highly-committed and
Slide 49: Strategic Plan 2016-2020: Agenda
Strategic Plan 2016-2020: Agenda 2012-2016 Strategic Plan delivery Key strategic lines 2016-2020: Value & Resilience Financial outlook Summary Repsol 3Q 2015 Results 49
Slide 50: Repsol 3Q 2015 Results
Repsol 3Q 2015 Results 3Q 2015 RESULTS Note: Repsol Group made the decision in 2014, prompted by the business reality and in order to make its disclosures more comparable with those in the sector, to disclose as a measure of the result of each segment the recurring net operating profit at current co
Slide 51: 3Q 2015 Results
Repsol 3Q 2015 Results 3Q 2015 RESULTS 51
Slide 52: Operating result by business segments and geographical areas
Repsol 3Q 2015 Results OPERATING RESULT BY BUSINESS SEGMENTS AND GEOGRAPHICAL AREAS 52
Slide 53: Adjusted net income by business segments and geographical areas
Repsol 3Q 2015 Results ADJUSTED NET INCOME BY BUSINESS SEGMENTS AND GEOGRAPHICAL AREAS 53
Slide 54: EBITDA by business segments and geographical areas
Repsol 3Q 2015 Results EBITDA BY BUSINESS SEGMENTS AND GEOGRAPHICAL AREAS 54
Slide 55: 2016-2020 Value & Resilience
2016-2020 VALUE & RESILIENCE February, 2016 55