Omv Petrom Sa · BVB:SNP
Omv Petrom Sa — PKO BP Securities Virtual Conference (June 2020)
73 slides from Omv Petrom Sa's conference presentation, June 2020
Slide 1: Capital Market Story
Capital Market Story June 2020 OMV Petrom S.A.
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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+ Q1/20 results review Swift reaction to market environment Outlook 2020 FY19 results review Appendix All figures throughout this presentation refer to OMV Petrom Group (herein after also referred to as “the Group”), unless otherwise stated. The financial
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 – June 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 ~84% of AUM invested4 in the energy sector 21% Romanian State, no special rights attached 51
Slide 9: Attractive shareholders’ return
Attractive shareholders’ return 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, in line wit
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%1 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 2.5
Slide 12: Investing to reduce the environmental impact
Investing to reduce the environmental impact GHG1 intensity: reduction by 22% in 2019 vs. 2010 Freshwater Withdrawal Intensity: reduction by 36% in 2019 vs. 2012 CDP Climate Change score2: A- Upstream: EUR 50 mn investment for a new energy efficient gas treatment process (low temperature s
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 ► Highest integration value ► Sustainability of the ► Selective investments in ► Operational excellence reserves base Upstream ► Exploration portfolio ► Regional gas player ► Improved recovery ►
Slide 17: Upstream: Strategic achievements 2017 - 2019
Upstream: Strategic achievements 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 produci
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 Increase MTBF1 by focusing on root cause analysis and identification of new Automated wells2 technologies (% in total no. of wells) 80 95 Increase degree of automation and 70 75 digital
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 capitalizing on existing skills and know-how
Upstream: Expand in Black Sea region capitalizing on existing skills and know-how Romania – Neptun Deep OMV Petrom (50%), ExxonMobil (50%, Operator) Domino-1 discovery in 2012 (first offshore deep water exploration well) Resources Domino-1 discovery of 250-500 mn boe1 JV Expenditures to date
Slide 22: Downstream Oil: Strategic achievements
Downstream Oil: Strategic achievements 2017-2019 4-5 year refinery turnaround cycle Fully modernized fuel storage network <8% Fuel & Loss in 2019 MyAuchan, first convenience store in a filling 97% refinery utilization rate in 2019 station in Romania Polyfuel plant >5 mn l throughput/ f
Slide 23: Downstream Oil: high level of performance in Petrobrazi refinery
Downstream Oil: high level of performance in Petrobrazi refinery Utilization rate (%) 100 90 Improve refinery operations to international benchmarks 80 Maintain cost discipline 2016 2019 2021 2025 4-5 year turnaround cycle, limiting disruption of production and achieving cost savings Impleme
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 in Romania
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: Strategic achievements
Downstream Gas: Strategic achievements 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 integra
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: Q1/20 results review
Q1/20 results review OMV Petrom S.A.
Slide 36: Economic environment
Economic environment Oil price (USD/bbl) Gas prices (EUR/MWh)1 68.9 22.6 21.5 20.7 63.4 62.0 63.1 68.8 14.8 13.8 63.1 62.8 19.5 62.0 50.1 15.5 13.0 11.2 10.6 48.1 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 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 Authorities’ reaction to COVID: GDP growth: Emergency state since mid-March Q1/201: +2.7% yoy Health and social, fiscal and monetary measures 2020e2: -5% yoy Price cap for fuels, gas and power during emergency s
Slide 38: Operational performance
Key messages Q1/20 performance Clean CCS Operating Cash Clean CCS Financial Operating result Flow ROACE RON 1.0 bn RON 1.4 bn 12.5% Upstream: Operational Strong hydrocarbon production performance highlights Largest onshore 3D seismic survey in Europe (Urziceni East block) finalized Downstream Oi
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) -2% 0% +86% +17% +52% 153 151 150 152 150 +11% 6.75 19.85 18.61 6.46 71 72 71 72 72 4.68 12.23 13.37 3.62 3.85 9.39 82 79 79 80 79 Q1/19 Q2/1
Slide 40: CAPEX and E&A
CAPEX and E&A CAPEX incl. capitalized E&A Group CAPEX incl. capitalized E&A Q1/20 at RON 1.0 bn: (RON bn) 20 new wells and sidetracks ~210 workovers -30% -30% Securing long term logistic access to Petrobrazi refinery 4.2 Bio compliance blending project 2020E at RON ~3.0 bn (from RON 4.2
Slide 41: Income Statement highlights
Income Statement highlights Clean CCS Operating Result (RON bn) -21% -20% Q1/20 Clean CCS Operating Result reflects: 1.23 1.12 0.98 ► Lower oil and gas prices ► Improved refining margin ► Positive consolidation line Q1/19 Q4/19 Q1/20 Co&O and Cons Downstream Upstream Clean CCS Net Income1 (RON bn)
Slide 42: Special items and CCS effect
Special items and CCS effect RON mn Q1/20 Q4/19 Q1/19 Q1/20 CCS effect Clean CCS Operating Result 975 1,120 1,227 Negative due to decrease in quotations CCS effects: Inventory holding gains / (losses) (239) 17 38 Special items 94 (89) 23 Thereof Upstream (27) (204) 50 Q1/20 Special Items Downstrea
Slide 43: Clean CCS Operating Result
Clean CCS Operating Result Upstream (RON mn) 825 Lower oil and gas prices Higher exploration expenses -473 -20 -27 Higher depreciation -148 157 Q1/19 Market Volume Exploration Other Q1/20 Favourable FX effects Higher refining margin Downstream (RON mn) 96% refining utilization rate 661
Slide 44: Cash Flow highlights
Cash Flow highlights Cash Flow from Operating Activities (RON bn) -10% 1.78 1.51 1.36 Q1/20 CFO: lower decrease than Operating Result due to higher depreciation, impairments and provisions Q1/19 Q4/19 Q1/20 Free Cash Flow 1 (RON bn) -80% 0.67 0.74 Q1/20 CFO2: -10% yoy Q1/20 CFI3: +46% yoy 0.14
Slide 45: Swift reaction to market environment
Swift reaction to market environment OMV Petrom S.A.
Slide 46: OMV Petrom’s response to COVID-19 and the new market environment
OMV Petrom’s response to COVID-19 and the new market environment Working intensively with authorities to contain Partner for impact on operations and critical infrastructure Romania Reliable and responsible tax payer OMV Petrom: Attractive Proven track record in managing economic crises Prepar
Slide 47: Strong response to adjust to the weak market environment
Strong response to adjust to the weak market environment Rephased and optimized long-term delivery Reduced projects RON 1.2 bn1 CAPEX Cut of non-committed CAPEX (30%)2 Focus on projects in development, decrease by Reductions of >30% of number of wells to be drilled ~RON 1.5 bn Postpone explo
Slide 48: Prepared to cope with challenges
Prepared to cope with challenges Net Debt/(Cash) (RON mn) 1,286 40 Strong balance sheet -237 -2,897 No gearing -4,891 -5,982 -6,095 2015 2016 2017 2018 2019 Q1/20 Group’s Clean CCS Operating Result breakdown (%) (-30)% 43% Integrated business model supports financial 56% results ~95% Average 2
Slide 49: Outlook 2020
Outlook 2020 OMV Petrom S.A. @ OMV Petrom The energy for a better life.
Slide 50: Sensitivities in 2020
Sensitivities in 2020 OMV Petrom Group main sensitivities Operating Result impact Brent oil price USD +1/bbl ~EUR +20 mn Equity gas price EUR +1/MWh ~EUR +18 mn OMV Petrom indicator refining margin USD +1/bbl ~EUR +25 mn USD appreciation by 5 USD Exchange rates (EUR/USD) ~EUR +50 mn cents 50 | OMV P
Slide 51: Outlook 2020
Outlook 2020 Assumptions/Targets Indicators Actual 2019 2020 USD 40/bbl Brent oil price USD 64.21/bbl (Previously: USD 60/bbl) Production 152 kboe/d decline below 5% yoy 1 Refining margin USD 4.67/bbl USD >5.0/bbl RON ~3.0 bn CAPEX 2 RON 4.2 bn (Previously: RON ~4.2 bn) Negative FCF after dividends
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Slide 53: FY19 results review
FY19 results review OMV Petrom S.A.
Slide 54: 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 Shallow offshore drilling campaign Coker Closed Blowdown system 3.0 CCPP Brazi planned shut down 2.6 Recognition of asset
Slide 55: 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 56: 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 57: 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 58: 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 59: 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 60: 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 61: 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) -11% -11% 3.82 Lower net elect
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Slide 63: Appendix
Appendix OMV Petrom S.A. @ OMV Petrom The energy for a better life.
Slide 64: Upstream Romania map
Upstream Romania map 1 64 | OMV Petrom Capital Market Story – June 2020
Slide 65: 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 66: 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 Total number of fillin
Slide 67: Romanian gas market overview in 2019
Romanian gas market overview in 2019 Regula- Regulatory Body tory Romanian Energy Regulatory Authority (ANRE) IMPORTS: various 23% 77% PRODUCTION: , Romgaz, … STORAGE: Supply TRANSPORTATION: Transgaz Romgaz, Depomures, Amgaz SUPPLY: , Romgaz, Engie Romania, E.ON Energie Romania, ... Distribu- tion D
Slide 68: Romanian power market overview in 2019
Romanian power market overview in 2019 Regulatory Regulatory Body Romanian Energy Regulatory Authority (ANRE) Coal Gas Nuclear Hydro Renewables Production Imports Supply 24% 16% 19% 27% 14% Transport & Distribution System Operator (TSO&DSO) Market(s) Ancillary services & Mid/long term fwd market(s)
Slide 69: 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, Change in net working capital (NWC) 146 -27 -199 32 -256 Cash flow from investing activities (CFI) -4,953 -2,896 -2,446 -4,261 -3,556 Cash flow from financing activiti
Slide 70: 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 71: 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 72: 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 Q1/20 Sales 16,647 19,435 22,523 25,485 5,420 5,900 6,869 7,296 6,086 Clean CCS Operating Result 1,700 3,273 4,804 4,573 1,227 998 1,228 1,120 975 2 Operating Result 1,476 3,270 5,213 4,245 1,28
Slide 73: 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: July 29: Q2 2020 results October 29: Q3 2020 results 73 | OMV Petrom Capital Market Story – June 2020
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