Societatea Nationala De Gaze Naturale Romgaz S.a. · BVB:SNG
Societatea Nationala De Gaze Naturale Romgaz — Romgaz — FY2019 Earnings Presentation
33 slides from Societatea Nationala De Gaze Naturale Romgaz's earnings presentation, February 2020
Slide 1: 2019 Financial and Operational Preliminary Results
ROMGAZ 2019 Financial and Operational Preliminary Results February 2020
Slide 2: Disclaimer
Disclaimer Romgaz Group (Romgaz or Romgaz Group or The Company) consists of SNGN Romgaz SA as parent company, Filiala de Înmagazinare Gaze Naturale Depogaz Ploieşti SRL (subsidiary owned 100% by Romgaz SA), Depomureş SA (40% owned by Romgaz SA) and SC Agri LNG Project Company SRL (25% owned by Romga
Slide 3: Contents
Contents page # Economic context and gas market 4 ROMGAZ: Highlights Q4/FY 2019 / Updates 8 Main events / Fiscal framework applicable / Group developments ROMGAZ: Group Overview 11 Main Activities 14 Financial Performance 23 Investments 26 Main Strategic Objectives 27 Dividend Distribution 29 Romgaz
Slide 4: Economic context and gas market: Romania
Economic context and gas market Romania: Large country, manageable debt, growth potential Population1 2019E (mln) GDP1 (USD bn) 38.0 607 586 566 2018 2019E 2020E 19.5 262 262 247 245 244 240 180 170 161 10.6 9.8 112 107 107 7.0 5.4 4.1 70 66 65 63 61 61 Poland Romania Czech Hungary Bulgaria Slovak C
Slide 5: Romania among top gas consumers and producers
Economic context and gas market Romania: among TOP gas consumers & producers / ROMGAZ: among TOP players in region ROMANIA: 2nd Gas Consumer in CEE 1 ROMANIA: 3rd Gas Producer in the EU 1 (2018, bn Cub ft/day) (2018, bcm, marketed output) 1.9 1.1 42.7 40.7 0.9 0.8 9.9 0.5 0.3 5.9 5.6 Poland Romania
Slide 6: Romania: Gas prices on BRM, producers and final consumers
Economic context and gas market Romania: Gas Prices on BRM, Gas Producers and Final Consumers Natural Gas Prices in Romania and on CEGH (RON/MWh) * 120 120 BRM - all gas trades 100 Imports, all mkts (available by Oct/19) 100 CEGH Front Month Index 80 80 Source: BRM - Romanian Commodities Exchange, 6
Slide 7: Romania: Gas consumption estimated to have declined in 2019
Economic context and gas market Romania: Gas consumption estimated to have declined in 2019 Natural gas consumption* (mln MWh) Mix of Energy Resources (FY 2019)** 130 3 15 17 16 8% Coal/gas-fired plants 13% Hydroplants estim 37% 65 Nuclear plants 119 109 115 113 -6% Other renewables 18% Imports 0 25
Slide 8: ROMGAZ Group: Highlights of events
ROMGAZ Group: Highlights of events Selected Events – relevant for our recent activity June 18-26, 2018 May 7, 2019 June 26 / Oct 28 / Dec 23, 2019 CERTIFICATION: ANIVERSARY: MANAGEMENT - BODs: Romgaz obtains re-certification of Romgaz celebrated 110 years from - SGM voted for a new BoDs its manageme
Slide 9: Highlights regarding taxation
ROMGAZ Group: Highlights regarding taxation Romanian Legal Fiscal framework and in place - withRegulatory Environment impact on Group’s operations UPDATE: GEO no. 1 / Jan 2020 – amended the GEO no. 114 / 2018 in a favorable way: – Free gas prices for gas producers starting July 1, 2020; – Free elect
Slide 10: Highlights for Q4/FY 2019
ROMGAZ Group: Highlights for Q4/FY 2019 Significant developments of Romgaz Group Market share FY 2019: in internal gas Capex Gas production consumption 892 mln RON -1.1% y/y estim 56% Net Profit Revenues Windfall Profit EBITDA +4.6% y/y +1.5% y/y Tax / Royalties +14.3 y/y Net Profit margin +30% y/y
Slide 11: Group Overview: Major Producer and Supplier of Natural Gas
ROMGAZ: Group Overview Major Producer and Supplier of Natural Gas, Operator of UGS in Romania Gas Exploration, Production & Supply • 8 exploration blocks (Romgaz - 100% working interest) - significant onshore and offshore exploration potential, important discoveries and enhancements made lately • Th
Slide 12: Group Overview: Major Producer and Supplier of Natural Gas in Romania
Group Overview Major Producer and Supplier of Natural Gas in Romania Mature area with over 100-year production history – subject to a Brodina significant production enhancement of main reservoirs Moldova Nord Transilvania We have 141 operational commercial Nord fields; 30 mature fields (over 30-
Slide 13: Audited Reserves and Contingent Resources
Group Overview Last external audit (Dec-2017): Strong portfolio of resources and reserves, Good prospects Gas Audited Reserves and Contingent Resources1 Dec 31, 2017 (bcm, % of total) Last external audit of our gas reserves and resources was completed by US DeGolyer&MacNaughton as of Dec-2017. 21.7
Slide 14: Exploration Activities
Exploration Activities Efforts undertaken to unlock the resource potential and secure production Concession Agreements in 8 onshore blocks for petroleum operations for 30 years started in Oct 1997 16,210 km² in Transylvania, Moldova, Oltenia and Muntenia basins, with 100% working interests Plus 1
Slide 15: Significant discoveries of natural gas
Exploration Activities Significant discoveries of natural gas ON-SHORE: Largest hydrocarbon discovery in the past 30 years (June 2016): located in NE of the Moesian Platform in Caragele structure – confirmed by production tests with 2 wells Estimated contingent resource of 150-170 mln boe (25-27
Slide 16: Natural Gas Production
Natural Gas Production FY2019: Favorable developments, natural decline already limited Romgaz: Significant Production level in 2019 (mln cm) We started production in Caragele Deep (our discovery) at end 1,500 - Jan 2020 with 1 well (1,500 boe/day) 2 other wells put in production in Caragele comm
Slide 17: Gas Supply & Sales: Market share and client portfolio
Gas Supply & Sales 2019: Strong market share and client portfolio Romgaz: Market share in domestic consumption (%, mln cm) 100% Imports 33 181 75% 53 Production delivered (incl 100% Schlumberger, deliveries to 7 Iernut/Cojocna), technological consumption, resold domestic gas 5,692 5,509 4,437 Estima
Slide 18: Gas Supply & Sales Q4/FY 2019
Gas Supply & Sales1 Q4/FY 2019: Strong gas sales to third parties, timely gas chain management Romgaz: Gas Sales from production Romgaz: Gas Chain Management (mln cm) to meet - revenues and volumes - seasonality and demand 4,450 4,280 3,978 3,300 2018 5,066 4,897 +7.6% 2019 y/y 2,150 -3% y/y 1,197 1
Slide 19: Underground Gas Storage
Underground Gas Storage Romgaz Group: Romania’s Largest Operator of UGS (Underground Storage) facilities Romgaz Group: Underground Gas Storages at end - 2019 - working capacities (mln cm/cycle) - Bilciuresti 1,310 Ghercesti 150 Sarmasel 950 Balaceanca 50 Urziceni 360 Total Working Capacity: 2,820 (s
Slide 20: Underground Gas Storage: Performance in Q4/FY 2019
Underground Gas Storage1 Favorable performance reported in Q4/FY 2019 Romgaz: Revenue from Storage Services (mln RON) - capacity reservation, withdrawal, injection - Romgaz: Regulated storage tariffs (RON/MWh) 350 20 300 2.37 2.53 15 250 331 1.80 1.87 1.68 1.9 200 1.67 1.61 298 10 150 13.14 13.68 10
Slide 21: Electricity Production & Trading: New power plant
Electricity Production & Trading “GAS to POWER” Investment: Construction of a new power plant Gross electric power capacity: 430 MW Gross electrical efficiency at nominal load: 56.4% CCGT Iernut benefits from a strategic positioning – in the middle of the national electricity system Main rol
Slide 22: Electricity Production & Trading Q4/FY 2019
Electricity Production & Trading1 Q4/FY 2019: activity gradually lower to make room for the new plant Romgaz: Revenues from Electricity (mln RON) Romgaz: Production of Electricity (GWh) 1,165 297 127 146 590 415 62 298 Q4/18 Q4/19 FY2018 FY2019 Q4/18 Q4/2019 FY18 FY2019 FY 2019: Revenues from Elec
Slide 23: Financial Performance: Profitability margins
Financial Performance1 FY 2019: All Profitability margins have improved Romgaz Group: Robust Profitability Rates Romgaz Group: EBITDA by Segments (mln RON) 50.4% 46.4% 43.4% 44.8% 2019 2,388 159 13 -7 20 32.4% 30.6% 27.3% 28.1% 24.3% 23.7% 21.8% 2018 2,008 105 92 35 18.9% Q4/18 Q4/2019 2018 2019 -20
Slide 24: Financial Performance: Net profit and margins
Financial Performance1 FY2019: Net Profit +5% y/y, robust profitability margins Million RON 2017 2018 2019 %ch Q4/18 Q4/19 %ch Summary FY2019 (vs FY2018) Revenues - of which 4,585 5,004 5,080 2% 1,560 1,290 -17% Revenues - total 5,080 mln RON (2%) Gas Production 3,512 3,978 4,280 8% 1,197 1,062 -11
Slide 25: Strong Balance Sheet, Debt-free at end-2019
Financial Performance1 Strong B&S Structure, Debt-free at end-2019 Romgaz Group: Selected Balance Sheet Items Mln RON Dec 31, 2017 Dec 31, 2018 restated restated Dec 31, 2019 • Debt-free Balance Sheet Total non-current assets, thereof 6,393 6,445 6,200 Property plant and equipment 6,222 6,280 5,989
Slide 26: Investments
Investments1 Key role in the company’s sustainable development – FY 2019 developments Romgaz Group: Capital Expenditures (RON mln) 1200 2019: Total CAPEX of ROMGAZ Group amounted to RON 892 mln, which accounts for 65% of the budget planned for this period Investments are financed from the compan
Slide 27: Main Strategic Objectives
Main Strategic Objectives Strong Commitment for Business Development GROUP DEVELOPMENT STRATEGY Romgaz proposes to be an active, profitable and competitive player on the gas & electricity production market Romgaz has to pursue both an intensive development on the local market and an internationa
Slide 28: Main development directions
Main Strategic Objectives Strong Commitment for Business Development Main development directions taken into account: Improve the efficiency of our gas production in new value-added production activities Consolidate our position on the energy supply markets (gas-fied / possibly renewable energy)
Slide 29: Dividend distribution
Dividend distribution Significant Dividends cashed-out in previous years Romgaz: History of Gross Dividend Distribution1 (RON mln) Romgaz: Gross Dividend Payout ratios* Additional dividends 1 For the fiscal years 2016, 2017, 2018: * Payout ratios computed as: Dividends from Retained Earnings Dividen
Slide 30: Romgaz Group – Investment Case
Romgaz Group – Investment Case Why to invest in Romgaz shares EBITDA margin of 50.4%, EBIT margin of 32.4% and Net Profit margin of Operational excellence / robust margins 28.1% in 2019 High dividend payout ratios to please investors Gross Dividend payout ratio of 118% for 2018 (computed as Tota
Slide 31: The Board of Romgaz SA
The Board of Romgaz SA: Balanced Team of Professionals Manuela Petronela Stan Olteanu Marius Aristotel Jude Tudorel Harabor BoDs Chairperson Chairman of the Strategy Committee Manuela Petronela Stan Olteanu was re-appointed Marius Aristotel Jude was appointed interim Tudorel Harabor was re-appointed
Slide 32: Shareholding Structure and Stock Performance
Shareholding Structure and Stock Performance Romgaz: Among blue-chips on the domestic capital market 12M - Share Price Performance on the BVB RON 45.0 SNG: Share price on the BVB (RON) Period Min (RON) Max (RON) BET NG rebased 40.0 Q1/19 27.35 32.70 Romanian Other State shareholders Q2/19 31.50 35.1
Slide 33: Financial Calendar - 2020
ROMGAZ Financial Calendar - 2020 Investor Relations Feb 25: Release of the 2019 Preliminary Financial Results Confcall with financial analysts & investors E-mail: investor.relations@romgaz.ro April 22: SGM to approve the 2019 Financial Results IR: Manuela Ogrinja, CFA Alexandra Posea April 23: Relea