Slide 1: OMV Petrom Q4/16, FY 2016 and Strategy Update 2021+
Chapter divider slide: Design must be alike to chosen cover style (28pt) OMV Petrom Q4/16, FY 2016 and Strategy Update 2021+ February 16, 2017 Mariana Gheorghe, CEO
Slide 2: Legal Disclaimer
Legal Disclaimer This presentation does not, and is not intended to, constitute or form part of, This presentation may contain forward-looking statements. These statements and should not be construed as, constituting or forming part of, any actual reflect the Company’s current knowledge and its expe
Slide 3: Key messages 2016
Key messages 2016 Free cash flow at RON 1.6 bn, due to investment prioritization and strict cost discipline Clean CCS EBIT at RON 1.7 bn; higher Downstream contribution OMV Petrom’s Free Float increased to 15.8%; GDRs traded on the London Stock Exchange since October 2016 Dividend proposal: RON 0.01
Slide 4: Romanian macroeconomic and fiscal environment
Business Diagram Slide Romanian macroeconomic and for PowerPoint fiscal environment Macroeconomic environment Fiscal framework 2016 GDP growth1: 4.8% yoy Supplementary taxation5 extended until end-2017 CPI annual inflation: -0.5% end- Dec;12-month average: -1.5% Tax on constructions eliminated start
Slide 5: Economic environment
Economic environment Oil price (USD/bbl) and FX (USD/RON) OMV Petrom Indicator refining margin (USD/bbl) 4.18 4.07 7.75 42 7.14 48 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Avg Urals price in USD/bbl (left scale) Avg RON/USD (right scale) Gas prices (EUR/MWh)1 Power prices in Roman
Slide 6: 2016 CAPEX and E&A in line with guidance
2016 CAPEX and E&A in line with guidance CAPEX cuts mainly driven by focus on the most profitable barrels CAPEX incl. capitalized E&A Group CAPEX incl. capitalized E&A (RON bn) 2016 down by RON 1.3 bn, -34% yoy 3.9 -34% 3.6 Upstream CAPEX down by RON 1.4 bn mainly on projects prioritization 2.6 3.5
Slide 7: Strong execution of efficiency plans
Strong execution of efficiency plans Upstream CAPEX Operating cost savings FCF1 OPEX in USD/boe RON bn RON mn RON bn +1.2 -10% -34% 13.16 3.9 -500 1.6 11.85 2.6 0.3 2015 2016 2015 2016 2015 2016 2015 2016 Corporate Downstream Oil Downstream Gas Upstream 1 FCF before repayment of loans and dividend p
Slide 8: OMV Petrom Q4/16, FY 2016 and Strategy Update 2021+ (CFO)
Chapter divider slide: Design must be alike to chosen cover style (28pt) OMV Petrom Q4/16, FY 2016 and Strategy Update 2021+ February 16, 2017 Andreas Matje, CFO
Slide 9: 2016 Strong financial resilience
2016 Strong financial resilience + + Profitability impacted by Strengthened balance sheet Restoration of dividend ongoing market backdrop distributions RON 1.7 bn Clean CCS EBIT, Switched from RON 1.3 bn net 2016 proposed: RON 0.015/share1 -33% yoy debt at end 2015 to RON 0.2 bn Dividend yield2: 5.3
Slide 10: Cash flow development
Cash flow development Strong FCF generation 2016 vs. 2015 2016 operating cash flow resilience supported by: RON mn Q4/16 Q4/15 2016 2015 ► cost savings partly offsetting impact of Cash flow from operating activities (CFO) 1,070 1,104 4,454 5,283 declining prices and refining margins Thereof, Depreci
Slide 11: Income statement summary
Income statement summary RON mn Q4/16 Q4/15 2016 2015 Q4/16 vs. Q4/15 Sales 4,595 4,518 16,247 18,145 Clean CCS EBIT margin development driven by cost reductions, as yoy sales performance was relatively flat Clean CCS EBIT 454 211 1,694 2,522 Special items include charges of RON (193) mn in Q4/16 EB
Slide 12: Clean CCS EBIT overview
Clean CCS EBIT overview Q4/16 Clean CCS EBIT more than double yoy Q4/16 vs. Q4/15 Improved Clean CCS EBIT due to lower exploration expenses and depreciation RON mn Q4/16 Q4/15 2016 2015 Upstream result supported by higher oil prices (Urals up 13%) and gas sales volumes Clean CCS EBIT 454 211 1,694 2
Slide 13: Upstream Clean EBIT turnaround
Upstream Clean EBIT turnaround Improved results based on lower Exploration and Other expenses Key drivers Q4/16 vs. Q4/15 Clean EBIT (RON mn) 246 Realised oil price +15% Decreased production costs (-3%), royalties & depreciation 293 -223 Lower exploration expenses due to lower activity in Neptun 216
Slide 14: Upstream – Improved efficiency
Upstream – Improved efficiency Production decline below upper limit guidance Key drivers Q4/16 vs. Q4/15 Hydrocarbon production (kboe/d) Highlights -3% 176 175 177 174 170 OPEX, in USD/boe terms, -3%, as efficiency plans delivered lower services, personnel and 81 81 81 79 78 materials costs 96 94 96
Slide 15: Downstream results improved
Downstream results improved Both Downstream segments displayed improved contribution Key drivers Q4/16 vs. Q4/15 Clean CCS EBIT (RON mn) 292 269 13 11 Higher contribution from both refining (due to cost savings) and retail Good gas business performance 288 277 -8 5 Refining margins -8%, impacted by
Slide 16: Downstream – Mixed operational performance
Downstream – Mixed operational performance Refinery utilization rate (%) Refined product sales Extracting record performance levels off key assets volumes (mn t) Key drivers Q4/16 vs. Q4/15 +4 pp -5% 92% 94% 97% 96% 1.34 1.39 1.27 Growth in retail sales of +2%1 1.14 1.13 68% Highlights Higher gas sa
Slide 17: Stronger balance sheet
Stronger balance sheet Net debt/(cash) development (RON bn) Main developments Switched from RON 1.29 bn net debt position at end 2015 to RON 0.24 bn net cash at end 2016 1.29 1.37 1.26 0.12 Equity ratio2 -0.24 ► end-2015: 62% Dec 31, 2015 Mar 31, 2016 Jun 30, 2016 Sep 30, 2016 Dec 31,2016 ► end-2016
Slide 18: Business Outlook 2017
Business Outlook 2017Diagram Slide for PowerPoint Assumptions Targets Brent at USD 55/bbl Production decline up to 3% yoy Refining margins to decline CAPEX budget increased to EUR 0.8 bn Fuel demand on an upward trend (~85% in Upstream) Gas demand broadly flat; high Positive FCF after dividends comp
Slide 19: OMV Petrom Strategy Update 2021+ (CEO)
Chapter divider slide: Design must be alike to chosen cover style (28pt) OMV Petrom Q4/16, FY 2016 and Strategy Update 2021+ February 16, 2017 Mariana Gheorghe, CEO
Slide 20: Our path to long-term success
Our path to long-term success Deliver Defined Execution Solid Foundation Vision Clear Strategy Sustainable Value Plan Creation Sustainability of reserves base Integrated business Operational Provider of model delivers Enhance efficiency sustainable access value through the competitiveness of Value c
Slide 21: 2021+ Centered around three key pillars
2021+ Centered around three key pillars Enhancing Developing Regional competitiveness in growth options expansion the existing portfolio Commitment to deliver attractive shareholder returns 21 | OMV Petrom │ 2016 results and Strategy Update 2021+ presentation │ February 2017
Slide 22: Exploiting potential in existing upstream field portfolio
Exploiting potential in existing upstream field portfolio Maximize economic recovery Oil and Gas recovery rates Mature contingent resources through: 28% 55% infill drilling campaigns 50% 25% selected field redevelopment programs Adding ~150 mn boe1 reserves from existing fields Current 2016 Ultimate
Slide 23: Relentless pursuit of operating efficiencies
Relentless pursuit of operating efficiencies Focus on the most profitable barrels Commitment to operational excellence Upstream Further reduction of unit costs Modernization and simplification of installations and facilities Capturing of highest integrated operational value Maximization of availabil
Slide 24: Mature Neptun Deep opportunity
Mature Neptun Deep opportunity OMV Petrom (50%), ExxonMobil (50%, Operator) First exploration drilling campaign in 2011 – 2012 Domino-1 well gas discovery: a play opener Two seismic acquisition campaigns: 2009; 2012 – 2013 Second exploration drilling campaign 2014 - 2016 Seven wells drilled; most of
Slide 25: Capture downstream opportunities
Capture downstream opportunities Increase integrated value Conclude modernization of fuel Explore value-adding through refining and retail storage network opportunities for gas investments Finalise last depot modernization in Polyfuel project to upgrade production 2018 Explore technological mix (ope
Slide 26: Downstream: Enhance offer and customer experience
Enhance offer and customer experience Increase throughput per filling station in Romania (mn l) >5 Downstream 4.6 Value for money High quality leader Oil 2016 2021 Innovation and partnerships to strengthen Petrom and OMV brand positioning Downstream Gas Develop partnerships Expanding domestic Produc
Slide 27: Regional expansion to complement portfolio
Regional expansion to complement portfolio Leverage our local know-how Upstream Downstream Gas Transport capacities planned existing Capture synergies with existing operations Diversify sales channels for current production (subject to interconnectors ~80 mn boe reserves targeted from near-term deve
Slide 28: Success built on three core strategic enablers
Success built on three core strategic enablers People and Organizational Culture We are the energy Sustainability Respect the future Technology and Innovation Innovate for the future 28 | OMV Petrom │ 2016 results and Strategy Update 2021+ presentation │ February 2017
Slide 29: OMV Petrom Strategy Update 2021+ (CFO)
Chapter divider slide: Design must be alike to chosen cover style (28pt) OMV Petrom Q4/16, FY 2016 and Strategy Update 2021+ February 16, 2017 Andreas Matje, CFO
Slide 30: Portfolio investments
Portfolio investments EUR ~5 bn cumulative Capex anticipated over 2017 - 2021 Cumulative Capex allocation Upstream portfolio 100% Maximize value of current mature field portfolio Secure improved recovery from contingent 80% resources Deliver further growth in Romania 60% Drive regional expansion 40%
Slide 31: 2021 Clear, robust targets
2021 Clear, robust targets RRR1 Clean CCS ROACE3 100% by 2021 > 10% by 2021 CAPEX Gearing EUR ~1 bn p.a. Maintain a strong balance sheet FCF2 after dividends Dividend Positive for majority of period Attractive returns 1 Reserves Replacement Rate; 2 Free Cash Flow; 3 Clean Current Cost of Supply Retu
Slide 32: Dividend considerations
Dividend considerations Commitment to deliver a competitive shareholder return by paying an attractive dividend Considerations 2016 DPS2 proposal: RON 0.015 EUR mn 347 Earnings Stress tested forecasts under various pricing points and FX assumptions Oil & Gas prices 189 Upcoming CAPEX CAPEX FCF1 gene
Slide 33: OMV Petrom Strategy Update 2021+ (CEO)
Chapter divider slide: Design must be alike to chosen cover style (28pt) OMV Petrom Q4/16, FY 2016 and Strategy Update 2021+ February 16, 2017 Mariana Gheorghe, CEO
Slide 34: Leading integrated regional player
Our vision Committed to enhance customer experience Leading integrated regional player Regional growth leveraging Romanian expertise Sustainable access to energy for everyday modern life 34 | OMV Petrom │ 2016 results and Strategy Update 2021+ presentation │ February 2017
Slide 35: OMV Petrom
GA OMV Petrom
Slide 36: Contact Investor Relations
Contact Investor Relations OMV Petrom Investor 2017 Financial Calendar Relations April 25: Annual General Meeting of Shareholders May 11: Q1 2017 results Tel.: +40 372 161 930 E-mail: investor.relations.petrom@petrom.com August 10: Q2 and HY 2017 results Homepage: www.omvpetrom.com November 9: Q3 20