Repsol Sa · BME:REP
Repsol Sa — Shareholder Meeting (May 2017)
58 slides from Repsol Sa's shareholder meeting presentation, May 19, 2017
Slide 1: Annual General Meeting
REPSOL Annual General Meeting May 19th, 2017 1
Slide 2: All rights reserved / forward-looking statements
ALL RIGHTS ARE RESERVED © REPSOL, S.A. 2017 Repsol, S.A. is the exclusive owner of this document. No part of this document may be reproduced (including photocopying), stored, duplicated, copied, distributed or introduced into a retrieval system of any nature or transmitted in any form or by any mean
Slide 3: 2017 Annual General Meeting: Contents
2017 Annual General Meeting: Contents Sector Environment Energy Transition 2016 Results 2017 First Quarter Results Proposals for the Annual General Meeting 3
Slide 4: Sector Environment
eae ee Sector Environment
Slide 5: Persistence of low oil and gas prices, which are slowly recovering
Sector Environment Price environment Brent Henry Hub $/barrel Average 2014 $/MBtu 120 99.0 Average 2014 5.5 100 4.4 Average Average 1Q Average 1Q 4.5 2015 2017 80 Average 2016 2017 Average 2015 Average 2016 52.4 43.7 53.7 2.7 3.3 3.5 2.5 60 2.5 40 20 1.5 2014 2015 2016 2017 2014 2015 2016 2017 Persi
Slide 6: Stable exchange rate
Sector Environment Exchange rate $/€ 1.5 Average 2014 1.33 1.4 1.3 Average 2015 Average 2016 1.2 1.11 1.11 Average 1Q 2017 1.1 1.06 1 2014 2015 2016 2017 Stable exchange rate 6
Slide 7: Favorable environment for Downstream
Sector Environment Downstream Refining Margin Indicator Year-on-year growth in demand for gasoline and diesel in Spain $/barrel 4.5% 12 Average 2015 1.8% 8.5 Average 1Q 2017 10 7.1 0.2% Average 2016 8 6.3 Average 2014 -1.2% 6 4.1 -3.5% -4.3% 4 -5.6% -6.4% -6.4% 2 2008 2009 2010 2011 2012 2013 2014 2
Slide 8: Spain grew 3.2% in 2016
Sector Environment Gross Domestic Product % Real GDP growth 10 8 7.5 6.3 6 5.4 5.3 5 4.6 4.1 Developing countries 4.2 4.0 4 3.1 3.5 3.3 3.4 3.2 Spain 3.2 1.7 1.9 3.2 3.1 World economy 2 1.2 1.2 2.1 1.6 Developed countries 0 1.4 0 -1.0 -1.7 -2 -2.6 2010 2011 2012 2013 2014 2015 2016 -4 Source: Intern
Slide 9: Energy transition
Energy transition 9
Slide 10: The world needs more energy supply to support its growth
Energy Transition Energy highlights of the 21st century World population will rise to 9.7 Bn by 2050 (+2 Bn), driven by emerging countries Today, 17% of the global population (1.2 billion people) have no access to electricity. By 2040 2.7 billion people will gain access to electricity. Currently, 38
Slide 11: Elements that will contain the increase in energy demand
Energy Transition Energy highlights of the 21st century A dual world depending on the paths taken by developed economies and by emerging countries, possibly with different interests Geopolitical instability will be key to determining if the world evolves towards a more collaborative economy or becom
Slide 12: Megatrends that will shape the future
Energy Transition Megatrends that will shape the future Innovation shift Demographic asymmetries Population growth Digital revolution Ageing Acceleration of R&D cycles Hyper-urbanization Robotization MEGATRENDS Expansion of middle class New types of mobility Talent migration Resource constraints New
Slide 13: Energy industry familiarized with energy transitions
Energy Transition We are heading towards a new scenario that raises significant challenges Four major challenges posed by the energy context Distribution of energy consumption % Security Security of of supply 100 supply 75 Wood age Coal age Oil age Universal Security of supply Security of supply acc
Slide 14: All energies will be necessary to meet worldwide growth
Energy Transition Slowdown in the growth of global energy demand Mtoe Primary energy demand mix 17.9 18.000 6.9% Other renewables 16.000 1.1% 14.9 13.7 1.8% Bioenergy 14.000 9.6% 12.000 2.0% Hydroelectric 10.000 2.3% Nuclear 8.000 1.5% Coal 6.000 Oil Oil Oil 0.5% 4.000 Gas and Gas and Gas and Gas 52
Slide 15: Each problem must be examined rigorously
Energy Transition The sustainability challenge: climate change and urban pollution Climate change Urban pollution Global effect Local effect Effect The location of emissions-sources is irrelevant The location of the source of emissions is important CO2 and methane Basically three pollutants: SO2 , N
Slide 16: The solutions must be effective and economically sustainable
Energy Transition The sustainability challenge: climate change and urban pollution Climate change Urban pollution What has Kyoto agreement (1997), through Paris (2015) Agreements between legislators, auto manufacturers and fuels producers been done Emissions trading CO2 EURO regulations and fuel-spe
Slide 17: Climate change is a great global challenge
Energy Transition Climate change is a great global challenge Gt CO2 e Evolution of CO2 emissions and IEA scenarios 50 Increase in global temperature in 2100 45 Emissions with current policies 40 Emissions with new policies 2.7 ºC 35 (Paris Agreement) Historical emissions 30 Rest of 76% of the necess
Slide 18: All sectors must contribute to the energy transition
Energy Transition Climate change: contribution of sectors to the reduction of greenhouse gases Energy: Global CO2 emissions Measures to reduce emissions by sector by sectors Heat and power generation Transport Services Others Increased engine efficiency 3% 7% Heat and power generation Efficiency Inc
Slide 19: Urban pollution: competitive solutions available
Energy Transition Urban pollution: competitive solutions available Gasoline, AutoGas, LPG Diesel Electric vehicle and Bioethanol Currently available competitive solutions Competitive solution available in 2019 with Euro 6D Currently dependant on significant subsidies and Since 2001 (Euro 3 Regulatio
Slide 20: Oil and Gas Climate Initiative
Energy Transition The oil and gas sector, committed to innovation to combat global warming OBJECTIVE: DRIVE PRACTICAL ACTION OIL AND GAS CLIMATE INITIATIVE on climate change through collaboration decrease of combined GREENHOUSE GAS Led by the CEOs of 10 oil EMISSIONS (GHG) and gas companies from the
Slide 21: Repsol, integrated energy company
Energy Transition How does Repsol address the transition challenge? 4.3 million metric tons of CO2 /year avoid and Focused on energy an investment of €500 million through 2020 efficiency and emissions reduction Domestic coal price Issue of Green Bond Team and organizational model ready to address th
Slide 22: 2016 Results
2016 Results 22
Slide 23: Transformation Program and Strategic Plan focused on creating value
2016 Results Main milestones in 2016 Transformation Program Strategic Plan Internal commitment External commitment Integration of Talisman Value creation Global company with a strong E&P presence Resilience Efficiency Efficiency Sustainability and innovation Portfolio management 1. V
Slide 24: Talisman integration
2016 Results Talisman integration Production Increase in production and reserves ~700,000 boe/day Growth Increase in operated assets Broad portfolio of projects and exploration opportunities Reserves ~2.3 billion boe Focus on 3 regions and 3 plays Global portfolio Diversification Balance b
Slide 25: Talisman integration has generated synergies of $400 million per year
2016 Results Talisman integration ~$400 million in Synergies More than 450 initiatives in 2020 More than 250 people in over 20 countries Millions of dollars Policies and processes 195 working on the integration 378 398 Systems 130 94% of initiatives implemented, 65% completed 350 95 Duplication
Slide 26: Strategic Plan - Main achievements in 2016
2016 Results Strategic Plan - Main achievements in 2016 1. Synergies and efficiencies 2. Flexibility More than €1.6 billion Capex reduction: 55% Highest net income of the last four years 2 Upstream: increasing results and flexibility 1 Downstream: strength of the integrated model 4 Debt redu
Slide 27: Synergies and efficiencies
2016 Results Main achievements in 2016 1. Synergies and efficiencies 2016 Objectives Savings earned Synergies €200 M €300 M Upstream (Opex & Capex) €600 M €800 M Downstream (Margin and efficiency) €200 M €300 M Corporate (Rightsizing) €100 M €200 M €1.1 €1.6 €2.1 billion billion billion in 2
Slide 28: Flexibility
2016 Results Main achievements in 2016 2. Flexibility Group Capex(1) Upstream assets at an advanced stage of development Billions of dollars Limited presence in new capital-intensive development projects 8 55% High proportion of unconventionals 6 (Capex adjustable in accordance with crude pric
Slide 29: Portfolio management: total divestments €5.1 billion
2016 Results Main achievements in 2016 3. Portfolio management Upstream: €1.6 billion Downstream: €1.6 billion Corporation: €1.9 billion Eagle Ford-Gudrun swap Piped LPG 10% Gas Natural Fenosa Tangguh (Indonesia) 10% CLH TSP (Trinidad and Tobago) Offshore wind (United Kingdom) Diluti
Slide 30: FCF Breakeven
2016 Results Main achievements in 2016 4. FCF Breakeven Group FCF Breakeven Upstream FCF Breakeven $/barrel $/barrel 94 48 42 61 2015 2016 2015 2016 Efficiency programs and cost control have improved Repsol's competitiveness in a low price environment 30
Slide 31: Results
2016 Results 2016 Results Figures in millions of euros 2015(1) 2016 Upstream (925) 52 Downstream 2,150 1,883 Corporate and others 627 (13) Adjusted Net Income(2) 1,852 1,922 + €70M Inventory effect (459) 133 Special items (2,791) (319)(3) Net Income (1,398) 1,736 + €3,134M 1. Includes the necessary
Slide 32: Upstream: increasing results and flexibility
2016 Results Upstream: increasing results and flexibility Adjusted Net Income Millions of euros Great ability to adapt to the price environment Flexible assets portfolio 52 Savings of more than €900 million (925) Exploration and production in over 30 countries and an operator in 24 of them 2015 2016
Slide 33: Upstream: improving flexibility and results
2016 Results Upstream: improving flexibility and results North America: Growth Europe, Africa, and Brazil: FCF Production: ~182 kboe/day Production: ~109 kboe/day Gas: 70% Crude: 83% 75% operated production 6% operated production Offshore development (deepwater) Unconventional portfolio Asia-Rus
Slide 34: Upstream production by play
2016 Results Upstream: improving flexibility and results Production Production by play Kboe/day +23% Non-operated in deep water 9% 33% Shallow 690 water 559 Unconventional 23% 35% Onshore ~90% of production in key regions (2016-2020) 2015 2016 North America Latin America Southeast Asia More speciali
Slide 35: Repsol has guaranteed its production objective until 2025
2016 Results Upstream: improving flexibility and results Discovery FID Gulf of Mexico FO/FG North America Bulgaria Kurdistan CPO 9 Eagle Ford MonArb (UK) Romania Greater Edson Chauvin Duvernay PM3 Equión Europa, Algeria Marcellus UK Corridor Africa and León Kinabalu Angola CRD Brazil Alaska Margarit
Slide 36: Discoveries in the last 9 years
2016 Results Upstream: improving flexibility and results 45 discoveries in the last 9 years Horseshoe-1(2) 8 of the largest annual discoveries worldwide (1) Horseshoe-1A(2) P-7 (Karabashskiy, Russia) (Alaska, USA) In 2016 we drilled 19 wells Polshkov-1 (Hans Asparuh, Bulgaria) 3 positive León-2
Slide 37: Reserve Replacement Ratio
2016 Results Upstream: improving flexibility and results Reserve Replacement Ratio Reserve Replacement Ratio: 103% Seven years above 100% 103% Organic Reserve Replacement Ratio : 124% Increase in reserves 2,382 million boe of proved reserves 75% natural gas 2016 Reserves with higher quality
Slide 38: Downstream: strength of the integrated model
2016 Results Downstream: strength of the integrated model Adjusted Net Income Millions of euros -12% Quality of our Refining assets Excellent results in Chemicals Improvement in the earnings of the commercial business units 2.150 Negative impact from the deterioration of the international si
Slide 39: Leadership in Refining and Marketing integrated margin
2016 Results Downstream: strength of the integrated model Integrated margin(1) of Refining and Marketing in Europe $/barrel (Repsol versus sector) 10 8 Leadership in Refining and Marketing integrated margin 6 Excellent quality of assets 4 2 Optimization and integrated management of all the bus
Slide 40: Efficiency in Refining
2016 Results Downstream: strength of the integrated model Refining margin indicator 2016 Utilization (Spain) Capacity to process 1,000,000 barrels/day $/barrel 88.0% High utilization (distillation and conversion) Distillation Robustness of margin indicator ($6.3/barrel) 8.5 Efficiency: reduc
Slide 41: Strength of the commercial businesses
2016 Results Downstream Commercial Chemicals More than 4,700 service stations in Spain, Portugal, Peru, and Italy Favorable situation: growth of demand Prominent non-oil position, with strategic alliances Competitiveness Plan: focus on efficiency and differentiation Very high quality and e
Slide 42: Finance: net debt variation
2016 Results Finance Net debt variation Billions of euros 1212 3.2 0.5 32% of net debt reduction 1010 Bond issue 88 (3.8) (3.6) Repurchase of Talisman bonds 66 11.9 Cash flow neutral at $42/barrel Liquidity (€9.347 M) is more than double short- 44 8.1 term maturities 22 Maintenance of cred
Slide 43: Comparison with competitors
2016 Results Comparison with competitors Average prices Cash flow, net investments, and (Billions dividends of euros) Brent price Price of gas Refining margin (Billions of dollars) 43.7 2.5 6.3 ($/barrel) ($/Mbtu) ($/barrel) 22.1 20.6 16.5 Adjusted Net Income 10.7 12.8 2015 2016 Variation 3.8 0.5
Slide 44: Repsol's share
2016 Results Repsol’s share Repsol shares and Ibex 35 160% 150% 140% Repsol Share price rose 33% in 2016 130% +33% January 2017: shareholder remuneration 120% 110% with a scrip acceptance of ~80% 100% Ibex 35 July 2017: shareholder complementary 90% 80% payout, amounting an anual remuneration
Slide 45: Sustainability
2016 Results Sustainability 2020 goal Downstream 19% Upstream 0 accidents 35% Compared to 2015 IF 2016: 1.46 45% 24,532 €78 M Total employees Invested CO2 emissions reduction in R&D 84 MtCO2e Prospective Nationalities 2014–2020 Objective Activities 36% 41 h. 07 €357 M ~1.9 Mt CO e 2 training/perso
Slide 46: 2017 First Quarter Results
2017 First Quarter Results 46
Slide 47: 59% increase in net income compared with first quarter of 2016
2017 First Quarter Results 2017 First Quarter Results Figures in millions of euros 1Q 2016 1Q 2017 Upstream 17 224 Downstream 556 500 Corporate and others (1) (94) Adjusted Net Income 572 630 10% Inventory effect (157) 84 Special items 19 (25) Net Income 434 689 59% 59% increase in net income compar
Slide 48: Operational performance exceeding commitments
2017 First Quarter Results 2017 First Quarter Results 2017 guidance 1Q 2017 Production (Kboe/d) ~680 693 Upstream CAPEX (Billions of euros) 2.7 0.5 Group CAPEX (Billions of euros) 3.6 0.6 Refining margin indicator ($/barrel) 6.4 7.1 Efficiencies and synergies (Billions of euros) 2.1 0.5 Op
Slide 49: Conclusions
2017 First Quarter Results Conclusions Integrated business model Value creation Resilience Highly integrated company Optimized portfolio with focus on Efficiency in Opex and Capex: key areas €2.1 billion in 2017 Optimal size of Upstream Technology and know-how Flexibility in Capex manage
Slide 50: Future: prepared to face future challenges
2017 First Quarter Results Future Norway Russia Canada UK Key businesses: Upstream and Downstream Ireland Germany Romania ~700,000 barrels of oil equivalent/day of production France Spain Italy USA Bulgaria Portugal Iraq China Morocco Capacity to process ~1 million barrels/day Algeria Libya Me
Slide 51: Proposals for the Annual General Meeting
Proposals for the Annual General Meeting 51
Slide 52: Annual accounts, results allocation, management and auditor
Proposals for the Points regarding the annual accounts, results allocation, management by the board Annual General Meeting and the re-election and appointment of the accounts auditor First. Review and approval, if appropriate, of the Annual Financial Statements and Management Report of Repsol, S.A
Slide 53: Points regarding shareholder's remuneration
Proposals for the Points regarding shareholder’s remuneration Annual General Meeting Sixth. Increase of share capital in an amount determinable by issuing new common shares having a par value of one (1) euro each, of the same class and series as those currently in circulation, charged to voluntary
Slide 54: Authorisation and delegation to the Board of Directors
Proposals for the Point regarding the authorisation and express delegation required for the Board of Annual General Meeting Directors Eight. Delegation to the Board of Directors on the power to issue fixed income, convertible and/or exchangeable securities for Company shares, as well as warrants (
Slide 55: Composition of the Board of Directors
Proposals for the Points regarding the composition of the Board of Directors Annual General Meeting Ninth. Re-election of Mr. Rene Dahan as Director Tenth. Re-election of Mr. Manuel Manrique Cecilia as Director Eleventh. Re-election of Mr. Luis Suárez de Lezo Mantilla as Director Twelfth. Ra
Slide 56: Remuneration of the Company Directors
Proposals for the Points regarding remuneration of the Company Directors Annual General Meeting Sixteenth. Advisory vote on the Repsol, S.A. Annual Report on Directors´ Remuneration for 2016 Seventeenth. Implementation of a compensation system referred to the share value for the CEO of the Compa
Slide 57: General matters
Proposals for the Point regarding general matters Annual General Meeting Twenty-first. Delegation of powers to interpret, supplement, develop, execute, rectify and formalize the resolutions adopted by the General Shareholders’ Meeting In addition, the shareholders will be informed on the amendment
Slide 58: Annual General Meeting
REPSOL Annual General Meeting May 19th, 2017 58