Slide 1: Presentation to Investors: 1H 2016 Results, Strategic Projects
Copyright © TATNEFT, 2016 PRESENTATION TO INVESTORS 1H 2016 RESULTS, STRATEGIC PROJECTS SEPTEMBER 2016
Slide 2: Macroeconomic Environment
MACROECONOMIC ENVIRONMENT 2015/ 1Q 2Q 2Q/1Q Change 2Q2016 vs 1Q2016, % Indicator 2013 2014 2015 2014 2016 2016 2016 -20% -10% 0% 10% 20% 30% 40% Urals, $/bbl 35% Urals 108.0 98.0 52.0 (47)% 32.7 44.3 35% (CIF Mid), $/bbl 20% Urals, th. RR/ t Urals 9% 24.5 26.9 22.6 (16)% 17.4 20.8 20% Naphtha Phy 1/
Slide 3: 1H 2016 Results of Operations
1H 2016 RESULTS OF OPERATIONS
Slide 4: Revenue Structure
REVENUE STRUCTURE 1H 2016 Net Revenue Net Revenue by Products by Products, RR bn Dynamics, RR bn 552.7 5% 476.4 7% 455.0 138.7 6% 5% 7% 7% 39% 39% 42% 49% 146.9 4% 6% 121.0 48% 45% 6% 12.2 6% 35% 97.8 39% 19.1 49% 54% 2013 2014 2015 1Q2016 2Q2016 Crude oil sales Refined Products Sales Petrochemicals
Slide 5: Production & Sales
PRODUCTION & SALES Crude Oil Production Dynamics Crude Oil Sales by Destination Market** 600 20 20.0 18.5 18.0 543 546 Domestic 550 532 516 518 39% 32% CIS Volumes, mln tonnes 15 500 47% 3% Non-CIS 7% 450 10 4% 65% 5.3 5.4 400 5 49% 54% 42% 38% 7% 7% 350 51% 55% 0 2013 2014 2015 1Q2016 2Q2016 2013 2
Slide 6: Lifting and Refining Costs
LIFTING AND REFINING COSTS Lifting Costs, RR/ bbl 265.6 269.9 280 260 251.9 245.6 246.9 240 220 200 180 160 140 120 100 +5.4% +1.6% 80 +0.5% 60 40 20 0 2013 avg 2014 avg 2015 avg 1Q2016 avg 2Q2016 avg Lifting Costs, RR per bbl Refining Expenses TANECO, RR/ t Refining expenses per tonne of crude oil
Slide 7: HVO Production at Ashalchinskoye Field
HVO PRODUCTION AT ASHALCHINSKOYE FIELD Information on the Project 376.4 thousand tonnes (approx. 2.45 mln barrels) of highly viscous oil (HVO) from Ashalchinskoye field produced in 2015 and 291.2 thousand tonnes (approx. 1.9 mln barrels) in 1H 2016* 332 horizontal wells and one vertical well dri
Slide 8: TANECO Operational Results
TANECO OPERATIONAL RESULTS Key Results Refined Products Output (th. tonnes) 1Q 2Q 2013 2014 2015 2016 2016* Crude refining throughput: Middle Distillates 2,344 2,649 2,586 610 598 Fuel Oil 1,913 2,153 2,250 539 590 2015: 8.65 mln tonnes (61.6 mln barrels) Naphtha 1,098 1,672 1,827 436 440 Diesel
Slide 9: 1H 2016 IFRS Results
an 28 T] 1H 2016 IFRS RESULTS
Slide 10: Key Financial Indicators
KEY FINANCIAL INDICATORS: Consolidated P&L, RR bn Chg %, 2013 2014 2015 1Q2016 2Q2016 2Q2016/ 1Q2016 Sales, gross 646.6 646.3 657.4 136.4 165.9 22% Export duties & excise tax (191.6) (169.9) (104.7) (15.4) (19.0) 24% Revenues, net 455.0 476.4 552.7 121.0 146.9 21% Costs and other deductions 350.6 36
Slide 11: Cost Dynamics
COST DYNAMICS Cost per barrel Breakdown*, 1H 2016 Capital Expenditures** by Segments, RR/bbl RR bn 1,867 1,669 1,742 0.5 1,596 11% 1,678 Other Costs 13.2 8% 9% 8% 8% 18% 9% 7% Transportation expenses 10% 13% 14% 9% 13% 15% 12% Selling, General and 30% 32% Administrative Expenses 30% 33% 34% Operatin
Slide 12: Revenue and Costs: 1H 2016 vs 1H 2015
REVENUE AND COSTS: 1H 2016 VS 1H 2015 19.5 18.2 2.0 RR bn (37.5) (13.9) 279.5 267.8 Revenue Decrease by RR 11.7 bn Revenue, net Export Duties & Crude Oil Prices Refined Products Sales Volumes Petrochemicals Revenue, net 1H2015 Excise taxes Prices and Other Sales 1H2016 13.5 9.8 (18.4) (0.8) (1.9) 20
Slide 13: EBITDA and Net Profit per bbl: 1H 2016 vs 1H 2015
EBITDA AND NET PROFIT PER BBL: 1H 2016 VS 1H 2015 188.6 8.5 19.4 (99.0) (64.3) (117.8) (125.3) 956.1 EBITDA, 766.2 Decrease by 19.9% RR/ bbl EBITDA Revenue, net Purchases Taxes Transport OPEX SGA Other EBITDA 1H2015 1H2016 188.6 8.5 5 7.5 19.4 (99.0) Net Profit, (117.8) (64.3) (51.5) 593.3 RR/ bbl 4
Slide 14: Debt Profile
DEBT PROFILE Debt Profile (at period ends) Debt Reconciliation, RR bn 50 Debt as at 31.12.2015 18.2 30 19.8 Debt/ EBITDA as of 30 June 2016: 0.10 10 Partial repay ments of $2 bn f acility 2010 (1.1) -10 2013 2014 2015 1H 2016 -6.4 -12.8 -30 Short-term debt -25.2 $75 mln f acility 2011 (0.2) Long-ter
Slide 15: Strategy and Key Projects
q Q: ; STRATEGY AN KEY PROJECTS
Slide 16: Strategy 2025: Focus on Doubling the Value and Reduction of the Risks
STRATEGY 2025: FOCUS ON DOUBLING THE VALUE AND REDUCTION OF THE RISKS Projected Value of Tatneft Group by 2025 $21.5 The Company’s goal by the year 2025 is to double its value to 21.5 bn bn USD $10.8 Optimize Tatneft’s group to facilitate strategic goals bn Downstream business growth is the mo
Slide 17: Strategy 2025: Exploration and Production
STRATEGY 2025: EXPLORATION AND PRODUCTION The Group's strategy in E&P: shift from Production Volumes, mln tonnes/ year stabilization to sustainable organic growth 34 Assessment of the reserves potential to 33 Production increase production after 2020. Current 1P increase 32 reserves - around 6.2
Slide 18: TANECO: Delayed Coking Unit
TANECO: DELAYED COKING UNIT Delayed Coking Unit – processing of vacuum residue (full processing with more than 95% depth conversion within the complex) with the production of naphtha, light and heavy coker gas oils and petroleum coke Nameplate capacity of the unit – 2 Mtpa of feedstock Summer
Slide 19: Crude Oil Refining Configuration Implemented at TANECO Complex
CRUDE OIL REFINING CONFIGURATION IMPLEMENTED AT TANECO COMPLEX* Process units CDU/VDU – atmospheric and vacuum crude oil processing (nameplate capacity 7 MMtpa. In 2013 115% capacity (of ) was achieved. Delayed Coker Stable Naphtha 1 Naphtha Splitter Naphtha Stabilizing Unit – stabilization of t
Slide 20: Strategy 2025: Refining
STRATEGY 2025: REFINING TANECO Project completion Reduction of processing costs per tonne up to 10% Development of high margin sales channels for the distribution of TANECO refined products in Russia and abroad Projected Completion Schedule for TANECO KEY INDICATORS TANECO Processing Units Cha
Slide 21: 2025: Retail
2025: RETAIL Over 50% sales of the Company’s own gasoline and diesel fuel via the Company’s retail network and wholesale operations Unique selling proposition: updated brand-concept, improved quality of filling stations and service standards, modifications in regional coverage Targeted Retail Ne
Slide 22: Strategy 2025: Tires
STRATEGY 2025: TIRES To maintain a leading market position in the tire market and to develop new tire models and types Sales and Price Positioning Key Target Indicators 2025 Mln. units 16.1 15.2 Change Indicator Target 2025/2015 11.8 Tire Sales, mln tires 16.1 +36% B-segment Product Ratio 48% +44 pp
Slide 23: Important Information
IMPORTANT INFORMATION THIS PRESENTATION IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE REPRODUCED IN ANY FORM OR FURTHER DISTRIBUTED TO ANY OTHER PERSON OR PUBLISHED, IN WHOLE OR IN PART, FOR ANY PURPOSE. FAILURE TO COMPLY WITH THESE RESTRICTIONS MAY CONSTITUTE A VIOLATION OF AP