Gazprom Neft · RUS:SIBN
Gazprom Neft — Sibneft — H1 1998 Earnings Presentation
35 slides from Gazprom Neft's earnings presentation, 1998
Slide 1: Sibneft
s ibne ft
Slide 2: AO Siberian Oil Company 1998 Interim Results
AO SIBERIAN OIL COMPANY l 1998 Interim Results for the Six Month Ending 30th June 1998
Slide 3: Agenda
Agenda l Introduction l EUGENE TENENBAUM, Head of Corporate Finance l HI 1998 Financials l IRINA PANCHENKO, Chief Accountant l Operating Review l Exploration and Production ANDREY MATEVOSOV, General Director, Noyabrsk l Refining and Marketing VALERY OIF, Vice President, Downstream l Outlook l EUGENE
Slide 4: Our Mission
Our Mission l To fully realise and enhance the potential of our resource base, our people and the markets we serve l To provide a world class financial return on a high quality asset base l To create a simple and transparent corporate structure: – one company, one common share l To set a new Russian
Slide 5: H1 1998 Financials & Outlook
HI 1998 Financials & Outlook EUGENE TENENBAUM Head of Corporate Finance
Slide 6: Introduction
Introduction l QI focus on YUKSI (not cost cutting) l Q2 renewed emphasis on costs & efficiency l Driving through change program despite crisis l Strong balance sheet - no default
Slide 7: Financials
Financials l EBITDA $150.4 mm l Success of production costs cutting program realization l ($60.4) mm net loss l Overstocking in Q1 l $150 mm program of social assets maintenance costs cutting will impact end 1999
Slide 8: H1 1998 Financials & Outlook
HI 1998 Financials & Outlook IRINA PANCHENKO Chief Accountant
Slide 9: Income Statement
Income Statement IH IH Thousands of US Dollars 1997 1998 Oil and gas revenues 1,371,727 1,269,195 Total revenues 1,487,586 1,377,727 Operating expenses 1,267,876 1,227,358 EBITDA 219,710 150,369 DD&A 204,701 238,212 EBIT 15,009 (87,843) Profit before tax 57,200 (45,757) Net income / (loss) 13,682 (6
Slide 10: Cashflow Statement
Cashflow Statement Thousands of US Dollars 1997 IH 1998 Net profit / (loss) 68,220 (60,388) Change in net accounts receivable 80,615 (322,042) Change in accounts payable (55,095) 162,955 Change in estimated income and other taxes 14,931 (84,571) Net cash from operating activities 354,449 (22,812) Ne
Slide 11: Balance Sheet
Balance Sheet Dec 31 June 30 Thousands of US Dollars 1997 1998 Cash and equivalents 108,694 211,914 Accounts receivable 422,788 744,829 Net oil and gas properties / PP&E 5,323,108 5,301,783 Total assets 6,604,171 6,898,926 Short-term debt 324,177 610,732 Long-term debt 150,000 150,000 Accounts payab
Slide 12: Capitalisation
Capitalisation 31/12 31/12 30/06 Thousand of US Dollars 1996 1997 1998 Short-term debt 119 986 324 177 610 732 Long-term debt 0 150 000 150 000 Shareholders` capital 2 340 947 2 409 167 2 348 779 Total debt / Shareholders` capital 5.13% 19.68% 32.39% Weighted average interest rate at end of period 5
Slide 13: Operational Review
Operational Review
Slide 14: Upstream
Upstream ANDREY MATEVOSOV General Director, Noyabrsk
Slide 15: E&P - 1998 Proved Oil Reserves
E&P - 1998 Proved Oil Reserves 1998 Proved Oil Reserves (million barrels) 14,000 11,851 12,000 Miller and Lents reserves as of January 9,749 1998 were 4,009 million barrels 10,000 9,180 8,000 6,771 6,339 6,000 sibneft sibneft 4,364 4,009 3,782 4,000 2,927 2,704 2,484 2,343 2,000 576 0 LUKoil Yukos R
Slide 16: Decreased Oil Production
Decreased Oil Production Thousand Thousand barrels barrels per per day day 1998E 352 In light of the sustained low oil HI 1998 342 price the Company cut 1997 359 production by 3.2% in HI 1998 1996 365 but projects total production for the 1995 402 year to be approximately 1994 448 17.4 million tons,
Slide 17: E&P - H1 Crude Oil Production
E&P - HI Crude Oil Production HI HI Crude Crude Oil Oil Production Production (thousand (thousand barrels barrels per per day) day) 1,100 1,051 Total HI 1998 production 8.7 million 880 tons, or 342 thousand barrels per day 682 664 660 10 482 sibneft sibneft 393 440 389 342 12 255 4 250 11 232 220 9
Slide 18: Targets for Schlumberger Collaboration
Targets for Schlumberger Collaboration l Jointly identify opportunities where Schlumberger technology can enhance production and optimize reserve recovery l Utilize Schlumberger’s industry leading techniques l Optimize Production l Reduce lifting costs l Enhance reserve recovery l Gain the joint kno
Slide 19: Making It Happen
Making It Happen – Discussing a Sibneft-Schlumberger Production Enhancement Group (SSPEG) comprising Schlumberger experts and Sibneft op’s personnel whose role will be to: • Identify opportunities • Propose plans, validate current & predicted results • Set targets / measurements for service provider
Slide 20: Making It Happen
Making It Happen – This group then will review the NNG production history to identify the fields with the best opportunity to benefit from a joint production enhancement focus – Vyngayakhinskoye was selected as the field that would best illustrate the Schlumberger production enhancement opportunitie
Slide 21: Fracturing Results
Fracturing Results l Data Frac’s completed in key fields – well defined understanding of reservoir behavior l Post production results from Fracturing treatments indicate significant benefits: – Case 1* pre-Frac production @4 t/day post frac production (after 15 days) @ 49 t/day – Case 2** pre-Frac p
Slide 22: Four Fields Underway
Four Fields Underway – Vyngayakhinskoye Schlumberger Fracturing program currently underway (2 treatments,2 wells on production) – Sutorminskoye Schlumberger Fracturing program currently underway (2 treatments completed to date) – Sugmut Schlumberger Fracturing program currently underway (1 treatment
Slide 23: Refining and Marketing
Refining and Marketing VALERY OIF Vice President
Slide 24: Crude Oil Marketing
Crude Oil Marketing Export Export sales sales up up to to 35.4% 35.4% to to 3.0 3.0 million million tonnes tonnes 1996 1996 1997 1997 HI HI 1998 1998 Omsk Omsk Domestic Domestic Export Export deliveries deliveries sales sales sales sales
Slide 25: Refining - H1 1998 Operational Highlights
Refining - HI 1998 Operational Highlights l Throughput reduced to 6.8 mm tonnes or 255,000 barrels per day, (20.3%) l 27.1% of refined products exported compared to 19.2% in 1997 l Depth of refining increased to 80.5% from 79.5% in 1997 l Focus on added value products l Aggressive penetration of new
Slide 26: High Depth of Refining - H1 1998
High Depth of Refining - HI 1998 % 80.5 The Omsk Refinery’s depth of refining is second 75.6 to none in Russia 69.9 66.0 63.4 61.0 Russian 62.7% 59.3 59.0 average 49.5 sk fa hi ev d l k k w av ra rs ns ris U m co sh sl ga og O hi Ki os ro by Ac An lg M Ya ui Vo ok ov N
Slide 27: Refining - Russian Comparison
Refining - Russian Comparison 1997 1997 Refining Refining Capacity Capacity HI HI 1998 1998 Refining Refining Throughput Throughput (millions (millions of of tons) tons) (thousand (thousand barrels barrels per per day) day) 40 420 35 350 30 280 sibneft 25 sibneft sibneft sibneft 20 210 15 140 10 70
Slide 28: Refined Products Marketing
Refined Products Marketing Refined Refined product product sales sales HI HI 1998 1998 l Relative isolation of Export Nefteproduct Omsk Oil Refinery, 27.1% 3.7% i.e. protection from refining over- capacity of Wholesale European Russia 69.2% l Access to refined Refined Refined product product distrib
Slide 29: Corporate Developments
Corporate Developments EUGENE TENENBAUM Head of Corporate Finance
Slide 30: Consolidation
Consolidation l Resubmitting prospectus for share issue l Meantime workforce swapping NNG shares with Sibneft shares l NNG consolidation complete Q1, 1999 l Omsk H2 1999
Slide 31: Corporate Initiatives
Corporate Initiatives l ADR level I, January 1999 l Website, www.sibneftoao.com l Full English annual report 1999 l Analyst site visit spring 1999
Slide 32: Corporate Governance
Corporate Governance l Charter published in July 1998 l Recommendations of Committee accepted in full l Renumeration, audit & nomination & assessment committees established l Reviewing non-executive positions
Slide 33: Strategic Alliances
Strategic Alliances l Russian crisis hit Elf equity investment l Looking at J.V. field developments with several international partners l Building on relationship with Schlumberger
Slide 34: Crisis Strategy
Crisis Strategy l Maintain prudent financing l Flexible response to changes in prices and demand l Focus on management of receivables l Focus on productive capex l Longer term - opportunities will arise
Slide 35: Devaluation Effect
Devaluation Effect l Refined products more competitive l Evaluating tax implications