Omv Petrom Sa · BVB:SNP
Omv Petrom Sa — Wood's EME Virtual Conference 2020
63 slides from Omv Petrom Sa's conference presentation, February 2020
Slide 1: Capital Market Story
Capital Market Story February 2020 OMV Petrom S.A.
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This page is left blank intentionally 2 | OMV Petrom Capital Market Story – February 2020
Slide 3: Legal Disclaimer
Legal Disclaimer This presentation does not, and is not intended to, constitute or form This presentation may contain forward-looking statements. These part of, and should not be construed as, constituting or forming part of, statements reflect the Company’s current knowledge and its any actual offe
Slide 4: Contents
Contents Investment proposition Strategy 2021+ Q4/19 and FY19 results review Outlook 2020 Appendix All figures throughout this presentation refer to OMV Petrom Group (herein after also referred to as “the Group”), unless otherwise stated. The financials represent OMV Petrom Group’s consolidated resu
Slide 5: Investment proposition
Investment proposition OMV Petrom S.A.
Slide 6: OMV Petrom’s Investment Proposition
OMV Petrom’s Investment Proposition Integrated oil and gas company Earnings resilience and High safety standards capital stewardship Strong cash conversion Cost efficiency and and attractive shareholder operational excellence return 6 | OMV Petrom Capital Market Story – February 2020
Slide 7: Operating in the integrated oil and gas sector
Operating in the integrated oil and gas sector Upstream Downstream Petrobrazi refinery, 4.5 mn t/yr capacity Romania 793 filling stations, operated via 2 brands: Petrom and OMV Production: 1P reserves: 5.5 mn t total refined product sales (thereof 2.8 mn t retail 53 mn boe 477 mn boe sales)
Slide 8: Shareholder structure and capital market environment
Shareholder structure and capital market environment OMV Petrom S.A. shareholder structure1 (%) 10% OMV2: Austria’s leading integrated international oil and gas company Fondul Proprietatea3: listed fund with ~80% of AUM invested4 in the energy sector 21% Romanian State, no special rights attached 51
Slide 9: …and cash flow into returns to shareholders
…and cash flow into returns to shareholders Dividend Policy OMV Petrom S.A. is committed to deliver a competitive shareholder return throughout the business cycle, including paying a progressive dividend. We aim to increase our dividend each year or at least maintain it at the previous year’s level,
Slide 10: Sustainability Strategy 2025
Sustainability Strategy 2025 HSSE vision: “ZERO Harm – NO Losses” Zero work related fatalities Stabilize Lost-Time Injury Rate at below 0.3 Carbon efficiency Reduce OMV Petrom’s carbon intensity of operations by 27% until 2025 (vs. 2010) Phase out existing routine flaring and venting latest
Slide 11: Our HSSE vision: “ZERO Harm – NO Losses”
Our HSSE vision: “ZERO Harm – NO Losses” 2019 LTIR1: 0.31* Upstream: Assets Moesia, Petromar and Kazakhstan recorded ZERO LTI in 2019 Asset Moesia achieved 10 mn man-hours without LTI Downstream Oil: 7 mn man-hours without LTI and the end of 2019 Downstream Gas: ZERO LTI in 2019 2.
Slide 12: Investing to reduce the environmental impact
Investing to reduce the environmental impact GHG1 intensity: estimated reduction by 22% in 2019 vs. 2010 Freshwater Withdrawal Intensity: estimated reduction by 36% in 2019 vs. 2012 Upstream: EUR 50 mn investment for a new energy efficient gas treatment process (low temperature separation) a
Slide 13: Turning efficiency savings into cash flow…
Turning efficiency savings into cash flow… Clean CCS Operating Result margin1 (%) Clean CCS ROACE (%) 14.3 13.8 21 18 17 9.8 14 10 6.5 4.5 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Cash flow (RON bn) Net cash and Debt (RON bn) -0.5 1.2 2.0 1.6 1.4 7.4 6.8 5.3 6.0 7.0 4.5 5.6 4.0 -2.9 -2.4 -3
Slide 14: Cost efficiency and operational excellence
Cost efficiency and operational excellence Total operating cost1 (RON mn) Key drivers 2019 vs. 2017 -169 Upstream: efficiency programs implemented led to cost base reduction by -7% Corporate Costs: -6% Headcount: further downsized -10% 2017 2018 2019 Upstream Downstream Oil Downstream Gas Corp
Slide 15: Strategy 2021+
Strategy 2021+ OMV Petrom S.A.
Slide 16: OMV Petrom’s strategic directions
OMV Petrom’s strategic directions Enhancing Developing growth Regional competitiveness options expansion Attractive shareholder return ► Highest integration value ► Sustainability of the ► Selective investments in ► Operational excellence reserves base Upstream ► Exploration portfolio ► Regional gas
Slide 17: Upstream 2017 - 2019
~11 USD/boe stabilized production cost despite production decline Neptun Deep concept selected and project maturation towards Final Investment Decision 28 marginal fields divested, additional 40 are being transferred Simplified footprint, 7 producing assets 70% automated wells and moderniz
Slide 18: Upstream: focus on the most profitable barrels
Upstream: focus on the most profitable barrels Unit cost development (USD/ boe) 11.7 10.9 ~10.8 ~10.7 Maintain strict cost and capital discipline and rigorous project reviews Drill around 100 new wells & sidetracks per year 2016 2019 2020 2021 Maintain high workover activity to manage producti
Slide 19: Upstream: continued operational excellence
Upstream: continued operational excellence Increased MTBF1 (days) 900 737 780 800 555 2016 2019 2020 2021 2025 Committed to operational excellence Increase MTBF1 by focusing on root cause Automated wells2 (% in total no. of wells) analysis and identification of new 95 technologies 75 80 70 42
Slide 20: IOR/ EOR (Polymer) projects in OMV Petrom
IOR/ EOR1 (Polymer) projects in OMV Petrom Polymer Flooding Surface Concept After primary and secondary recovery, typically a large amount of oil still remains in the reservoir providing a significant potential for EOR methods Polymer flooding is applied to enhance the amount of oil that can be
Slide 21: Upstream: Expand in Black Sea region
Upstream: Expand in Black Sea region capitalizing on existing skills and know-how Neptun Deep project OMV Petrom (50%), ExxonMobil (50%, Operator) Domino-1 discovery in 2012 (first offshore deep water exploration well) Resources Domino-1 discovery of 125-250 mn boe1 Joint Venture Expenditure
Slide 22: Downstream Oil 2017 - 2019
4-5 year refinery turnaround cycle Fully modernized fuel storage network <8% Fuel & Loss in 2019 MyAuchan, first convenience store in a 97% refinery utilization rate in 2019 filling station in Romania Polyfuel plant >5 mn l throughput/ filling station in Romania Coker unit closed blo
Slide 23: Downstream Oil: high level of performance in Petrobrazi refinery
Downstream Oil: high level of performance in Petrobrazi refinery Utilization rate (%) 100 Focus on operational excellence 90 Improve refinery operations to international benchmarks 80 Maintain cost discipline 2016 2019 2021 2025 4-5 year turnaround cycle, limiting disruption of production an
Slide 24: Downstream Oil: high-value products and technological opportunities in refining
Downstream Oil: high-value products and technological opportunities in refining Polyfuel project Coker Unit High-value products Increase output of high- Total investment of ~EUR 46 mn Evaluate petrochemicals demand and high-value A closed blowdown system opportunities products by reconversio
Slide 25: Downstream Oil: enhance offer and customer experience in retail
Downstream Oil: enhance offer and customer experience in retail Secure strong position on the retail market by clearly differentiating our two brands Best value for money Increase throughput per Top quality leader filling station in Romania (mn l) Together for Romania! Energy for a better life Und
Slide 26: MyAuchan in Petrom – first convenience store in a filling station
MyAuchan in Petrom – first convenience store in a filling station in Romania Enhance customer experience Save time through convenient Fair, accessible pricing Refreshed, welcoming (24/7) one-stop destination at every customer point on-site look & feel May 2017 May /Jun 2017 Nov /Dec 2017 3 stores op
Slide 27: IMO 2020: market opportunities from new regulations (1/2)
IMO 2020: OMV Petrom ready to capture market opportunities from new regulations (1/2) New Marine Fuel Oil Refinery well positioned (MFO) product with Financial impact for new regulations 0.5% Sulfur Advantaged by crude oil MFO 0.5% produced in Sensitivities of impact in slate…: Petrobrazi foll
Slide 28: IMO 2020: market opportunities from new regulations (2/2)
IMO 2020: OMV Petrom ready to capture market opportunities from new regulations (2/2) IMO global sulfur regulations Heavy Fuel Oil Yield (%) 9% Global sulfur limit for ships: from 4.5% in 2005, to 3.5% in 2012 and 0.5% in 2020 Ship owners have the following options: >1% Sulfur 1. Continue to use
Slide 29: Downstream Gas 2017 - 2019
Strengthened leading position on the Romanian gas market 51 TWh avg. yearly gas sales Diversified sourcing to extend supply portfolio 3.2 TWh Brazi power plant avg. yearly net electrical output Gas and power operations successfully integrated Regional operations in neighbouring countries
Slide 30: Downstream Gas: consolidate position on the Romanian gas market
Downstream Gas: consolidate position on the Romanian gas market Diversify gas Enhanced Origination and sales channels Portfolio management Gas sales (TWh) Sustainably preserve leading gas market position 54.8 50.4 51.4 47.3 Maintain end-user portfolio while supplying all other sales channels B
Slide 31: Downstream Gas: Value added through international expansion
Downstream Gas: Value added through international expansion Enrich sale and supply portfolios to mitigate volume and Romanian market concentration risks Expand operations in the neighbouring countries (subject to framework and interconnectors development) Grow regionally with Neptun volumes mo
Slide 32: Success built on three core strategic enablers
Success built on three core strategic enablers People & Technology & Sustainability Organizational Culture Innovation ► Supporting Business ► Digital Journey: Upstream ► Safety: ZERO Harm - NO Growth DigitUp; Downstream losses; Keep leading DigitalMotion; Corporate position in Process Safety ► Leade
Slide 33: Upstream: Technology and Innovation for a sustainable future
Upstream: Technology and Innovation for a sustainable future Digital Oil Field - well automation and online condition monitoring Standardized Narrow Band-Internet of Things (NB-IoT) - connectivity for the wells located in isolated areas and solution for cyber security Production automated fore
Slide 34: Downstream: Automation and digitalization
Downstream: Automation and digitalization Digital Solutions in Refinery Electronic coordination and management of the maintenance and operations Refinery Dashboard - Data gathering and processing for monitoring and prediction Refinery Virtual Operator Training - Desktop-based 2D & 3D simulator
Slide 35: Q4/19 and FY19 results review
Q4/19 and FY19 results review OMV Petrom S.A.
Slide 36: Economic environment
Economic environment Oil price (USD/bbl) Gas prices (EUR/MWh)1 68.8 68.9 25.0 25.9 23.7 22.1 21.2 68.3 68.8 63.4 63.1 19.5 62.0 24.5 15.5 13.0 63.1 62.8 11.2 62.0 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Avg Urals price in USD/bbl Avg Brent price in USD/bbl Romanian centralized ma
Slide 37: Romanian environment
Romanian environment Fiscal and regulatory Macroeconomic environment framework 2019e GDP growth1: +4.1% yoy Q4/19 GDP growth1: +4.2% yoy Government Emergency Ordinance no. 1/2020: • 2% fee on gas and power CPI annual inflation: Dec 19/Dec turnover eliminated starting 18: 4.04%; Q4/19: 1.08% Jan 2020
Slide 38: Key messages Q4/19
Key messages Q4/19 performance Clean CCS Operating Cash Clean CCS Dividend Financial Operating result Flow ROACE proposal 1 RON 1.1 bn RON 1.8 bn 13.8% RON 1.8 bn Upstream: Shallow offshore drilling campaign finalized, 3 producing wells Operational highlights Large 3D seismic acquisition survey
Slide 39: Operational KPIs
Operational KPIs Upstream Downstream Oil Downstream Gas Hydrocarbon production OMV Petrom Indicator Gas sales volumes (kboe/d) refining margin (USD/bbl) (TWh) -3% -3% -11% -11% 156 153 151 150 152 +54% +54% 6.46 19.85 72 71 72 71 72 5.27 4.68 12.88 13.37 3.62 3.85 12.23 9.39 84 82 79 79 80 Q4/18 Q1/
Slide 40: CAPEX and E&A
CAPEX and E&A Group CAPEX incl. capitalized E&A CAPEX incl. capitalized E&A (RON bn) 2019 at RON 4.2 bn: -2% -1% 100 new wells and sidetracks ~900 workovers 4.3 4.2 4.2 Shallow offshore drilling campaign Coker Closed Blowdown system 3.0 CCPP Brazi planned shut down 2.6 Recognition of a
Slide 41: Income Statement highlights
Income Statement highlights Clean CCS Operating Result (RON bn) -5% Q4/19 Clean CCS Operating Result reflects: 4.80 4.57 ► Lower oil prices -21% 1.43 ► Higher sales volumes of fuels and gas 1.12 ► Favorable FX development and prices for natural gas Q4/18 Q4/19 2018 2019 Co&O and Cons Downstream Up
Slide 42: Special items and CCS effect
Special items and CCS effect Q4/19 Gain from forward contracts in Downstream Gas RON mn Q4/19 Q4/18 2019 2018 Clean CCS Operating Result 1,120 1,426 4,573 4,804 Impairment of assets held for sale in Upstream CCS effects: Inventory holding 17 (81) 42 186 gains / (losses) Special items (89) 406 (3
Slide 43: Clean CCS Operating Result
Clean CCS Operating Result Upstream (RON mn) Favourable FX 794 3 0 31 -128 700 Higher realized gas prices Lower exploration expenses Lower crude prices Q4/18 Market Volume Exploration Other Q4/19 effects Sales volumes -1% Downstream 98% refining utilization rate (RON mn) 514 -3 Refined
Slide 44: Clean CCS Operating Result
Clean CCS Operating Result Upstream Favourable FX (RON mn) 3,224 119 -252 -63 2,845 Higher realized gas prices -183 Clarification of a tax topic Lower crude prices 2018 Market Volume Exploration Other 2019 effects Sales volumes -4% Downstream (RON mn) 97% refining utilization rate 1,695
Slide 45: Cash Flow highlights
Cash Flow highlights Cash Flow from Operating Activities (RON bn) -8% 7.39 6.80 -3% Q4/19 CFO: lower decrease than Operating Result due 1.82 1.78 to higher depreciation and impairments Q4/18 Q4/19 2018 2019 Free Cash Flow (RON bn) +4% 3.13 3.25 Q4/19 CFO1 -3% yoy +6% Q4/19 CFI2 -8% yoy 0.69 0.
Slide 46: Upstream KPIs
Upstream KPIs OPEX1 Key drivers 2019 vs. 2018 (USD/boe) -3% -3% 13.16 11.69 10.90 11.18 10.90 Lower OPEX, in USD/boe terms, -3%: Favourable FX Lower production available for sale 2015 2016 2017 2018 2019 Hydrocarbon production Total Upstream production -5%, due to: (kboe/d) -5% Natural decline
Slide 47: Downstream Oil KPIs
Downstream Oil KPIs OMV Petrom Indicator refining margin Key drivers 2019 vs. 2018 (USD/bbl) 8.71 7.75 -26% -26% 6.98 Refining margin -26% yoy, due to lower 6.28 4.67 products spreads 2015 2016 2017 2018 2019 Retail sales volumes (mn t) +4% +4% 2.70 2.74 2.85 Retail sales up 4% yoy, driven by hi
Slide 48: Downstream Gas KPIs
Downstream Gas KPIs Gas sales volumes Key drivers 2019 vs. 2018 (TWh) +16% +16% 54.84 51.39 50.36 51.40 47.32 Higher gas sales volumes, built on third party acquisitions Gas sales to regulated market: 12.51 TWh 2015 2016 2017 2018 2019 Net electrical output (TWh) Lower net electrical output -1
Slide 49: Outlook 2020
Outlook 2020 ert res OMV Petrom S.A. @ OMV Petrom The energy for a better life.
Slide 50: Outlook 2020
Outlook 2020 Assumptions/Targets Indicators Actual 2019 2020 Brent oil price USD 64.21/bbl USD 60/bbl Production 152 kboe/d decline below 5% yoy 1 Refining margin USD 4.67/bbl USD >5.0/bbl CAPEX RON 4.2 bn RON ~4.2 bn FCF after dividends RON 1.7 bn Positive 1 Not including portfolio optimization 50
Slide 51: Sensitivities in 2020
Sensitivities in 2020 OMV Petrom Group main sensitivities Operating Result impact Brent oil price USD +1/bbl ~EUR +20 mn OMV Petrom indicator refining margin USD +1/bbl ~EUR +25 mn Exchange rates (EUR/USD) USD appreciation by 5 USD cents ~EUR +50 mn 51 | OMV Petrom Capital Market Story – February 20
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Slide 53: Appendix
Appendix ert res OMV Petrom S.A. @ OMV Petrom The energy for a better life.
Slide 54: Upstream Romania map
Upstream Romania map 1 54 | OMV Petrom Capital Market Story – February 2020
Slide 55: Romanian oil market overview in 2019
Romanian oil market overview in 2019 Supply IMPORTS: 71% 29% PRODUCTION various TRANSPORTATION: Conpet Refineries (combined nameplate capacity ~13 mn tpa) 73% 27% processed crude oil ~12.11 mn tpa (of which ~8.6 mn t from Refineries import) Petroleum Products Imports Petrobrazi Rompetrol (Petromidia
Slide 56: OMV Petrom Group fuel retail sales (mn l)
OMV Petrom Group fuel retail sales (mn l) 117 117 120 105 94 81 2015 16 17 18 2019 2,746 2,798 2,922 2,444 2,573 Republic of Romania Moldova Serbia 2015 16 17 18 2019 181 172 170 171 175 153 403 Bulgaria Black Sea 348 342 328 318 312 2015 16 17 18 2019 62 2015 16 17 18 2019 94 56 | OMV Petrom Capita
Slide 57: Romanian gas market overview in 2019
Romanian gas market overview in 2019 Regula- Regulatory Body tory Romanian Energy Regulatory Authority (ANRE) IMPORTS: various ~20% ~80% PRODUCTION: , Romgaz, … STORAGE: Supply TRANSPORTATION: Transgaz Romgaz, Depomures, Amgaz SUPPLY: , Romgaz, Engie Romania, E.ON Energie Romania, ... Distribu- tion
Slide 58: Romanian power market overview in 2019
Romanian power market overview in 2019 Regulatory Regulatory Body Romanian Energy Regulatory Authority (ANRE) Thermal Nuclear Hydro Renewables Supply Production Imports 40% 19% 27% 14% Transport & Distribution System Operator (TSO&DSO) Market(s) Ancillary services & Mid/long term fwd market(s) Day a
Slide 59: Cash flow Statement
Cash flow Statement RON mn 2015 2016 2017 2018 2019 Cash flow from operating activities (CFO) 5,283 4,454 5,954 7,385 6,803 Thereof, Depreciation, amortization and 6,761 3,464 3,580 2,872 3,638 impairments including write-ups Change in net working capital (NWC) 146 -27 -199 32 -256 Cash flow from in
Slide 60: Income Statement
Income Statement RON mn 2015 2016 2017 2018 2019 Sales1 18,493 16,647 19,435 22,523 25,485 Clean CCS Operating Result 2,529 1,700 3,273 4,804 4,573 Thereof Upstream 919 575 1,674 3,224 2,845 Downstream Oil 1,315 1,112 1,533 1,335 1,501 Downstream Gas -145 11 220 360 282 Corporate and Other -68 -62 -
Slide 61: Operating Result
Operating Result RON mn 2015 2016 2017 2018 2019 Clean CCS Operating Result 2,529 1,700 3,273 4,804 4,573 Thereof Upstream 919 575 1,674 3,224 2,845 Downstream Oil 1,315 1,112 1,533 1,335 1,501 Downstream Gas -145 11 220 360 282 Corporate and Other -68 -62 -74 -87 -89 Consolidation 509 65 -80 -28 34
Slide 62: Key financial indicators (consolidated) – restated
Key financial indicators (consolidated) – restated1 in RON mn 2016 2017 2018 2019 Q1/19 Q2/19 Q3/19 Q4/19 Sales 16,647 19,435 22,523 25,485 5,420 5,900 6,869 7,296 Clean CCS Operating Result 1,700 3,273 4,804 4,573 1,227 998 1,228 1,120 Operating Result 2 1,476 3,270 5,213 4,245 1,288 969 939 1,049
Slide 63: Contact Investor Relations
Contact Investor Relations OMV Petrom Investor Relations Tel: +40 372 161 930 E-mail: investor.relations.petrom@petrom.com Homepage: www.omvpetrom.com 2020 Financial Calendar: April 27: Annual General Meeting of Shareholders April 29: Q1 2020 results July 29: Q2 2020 results October 29: Q3 2020 resu